18 / 2017 Annual Report
Annual Report 2017/18
Contents
Saman Bank in 2017/18
Statement of the Board and the CEO ...... 5
Key Figures ...... 7
About Saman Bank ...... 8
Saman’s position in the Securities and Exchange Organisation ...... 12
The Bank’s Legal Environment ...... 12
An Overview of Saman’s Operational and Financial Performance ...... 14
Resource and Expense Analysis ...... 19
Major Achievements of Bank in Different Areas ...... 22
Corporate Governance ...... 34
Senior Executive Team ...... 37
Division Heads ...... 38
Independent Audit ...... 38
Human Capital ...... 39 Saman Bank in 2017/18 Risk Analysis ...... 44
Major Accolades and Achievements in 2017/18 ...... 46
Saman Financial Group ...... 47
Plans and Projects for 2018/19 ...... 48
Financial Reports
Independent Audit Report ...... 50
Consolidated Financial Statements of Saman Group ...... 54
Financial Statements of Saman Bank (Public Joint-Stock) ...... 60
Explanatory Notes ...... 67 Statement of the Board and the CEO The financial year 2017/18 began with significant hopes for the Iranian economy and banking system, following the unfolding effect of the JCPOA in 2016. In the light of positive signs from negotiations toward the end of 2016/17, we at Saman carried out necessary measures to strengthen our infrastructural, technical, and operational capacities to adapt fully to the required standards of international financial transactions and to anticipate international dealings at the desired levels as soon as the sanctions are lifted. Our collective measures focused on expanding our international correspondence network and optimizing the operational structure of the bank under our new strategy. Through this new strategy, the board reviewed and improved the bank’s infrastructures in order to develop international relations, optimise risk management, and promote and coordinate compliance and anti-money-laundering structures in accordance with the latest international standards. At the same time, we strove to improve the joint revenue structure and concentrated on the bank’s investments in view of the serious restrictions imposed on joint revenues from lending.
| International Strategies at Saman The removal of sanctions could be viewed both as an opportunity and a potential threat for Saman. That is, it could open new opportunities for market development and improve the bank’s speed and quality of service, or it could introduce new rivals who may be entering the international banking service market. These new conditions prompted us to pursue even more extensively and diligently our plans to achieve our key goal: “To become the first-choice banking partner for overseas banks.” Saman’s international strategies can be divided into two major groups: Firstly, we seek to retain the existing correspondent banking relations and develop new relations as far as possible. Secondly, we strive to develop foreign exchange operations and shift from engaging in short-term international trade operations to financing national projects eligible for credit lines provided under JCPOA. In view of our expertise and experiences, we have entered into agreements with all countries providing credit lines, including China, India, Italy, Austria, Denmark, and France. As a result, we increased our foreign currency operations to a record $6.4 billion, which shows a 35% increase compared to the previous year’s revenue in foreign currency above the planned target. A Saman representative office was opened in Rome, Italy, and we have applied for a license to open a branch in Frankfurt, Germany. Our office in Rome is now active and serves Italian exporters and Saman’s correspondent banks. Our branch in Frankfurt has been equipped and is awaiting the legal paperwork to complete its licensure. Another important principle at Saman is ongoing staff training and career development for all levels. Saman Academy has designed and offered RBA, MIM, and DBA training courses with the cooperation of renowned international institutions and universities.
| Guidelines for Optimizing Operational Structure under the New Strategy We commissioned our new strategic plan, Horizon 2021, with the aim of optimizing business procedures in 2017/18 in order to offer our customers a new style of banking. Through the development and promotion of this plan, we sought the top international advisors in order to leverage the latest global knowledge and experience in business change management. The four axial approaches in our strategic plan include: • Restructuring retail banking and SME banking units to maximise profitability and concentrate on the added value chain of the economic actors in our target market (food and medicine); • Restructuring banking in order to reduce claims ratio and optimise the sale of repossessed assets; • Expanding and developing corporate banking units in view of optimal credit risk and liquidity risk measurement and management; • Expanding and developing infrastructure related to compliance rules and standards, anti-money-laundering efforts, and financial crime control. In light of the importance of credit risk, we made efforts to adapt our risk management and control models to the international models in order to comply with standard procedures in our international commercial transactions. Through optimizing our organisational structure and assembling an executive team of compliance and anti-money-laundering units based on the advice received from top-notch international advisors, we worked toward maximum trust-building and transparency in our banking operations with our international counterparts. This project will continue into 2018/19 as well. The first comprehensive software for this purpose is being localised and will be operational in 2018/19.
4 Annual Report 5 In spite of fluctuations in the exchange rate and deposit interest rates, especially during the second half of 2017/18, Saman continued to play a major role as a lender in the interbank market. This achievement was made possible by establishing a balance between resources and consumptions, which was one of the most important policies adopted by the Board. The illogical gap between deposit interest rates and lending interest rates in financial year 2017/18 continued to adversely affect the bank’s joint revenues. As this trend is predicted to continue in the future, the Board undertook the following measures to safeguard and grow the value of the bank’s assets and protect shareholders’ interests: First, we prepared the Saman Electronic Payment Company to enter the Stock Exchange as one of the big start- ups in payment services in Iran. We also established Saman Holding in which all of our affiliated companies could be highlighted in a single portfolio and whose shares could be offered in the Stock Exchange as advised by the Central Bank of Iran. The outcome has been a more profitable investment portfolio. Next, we separated the profitable and no profitable sections of the bank’s assets to allow more precise management of revenues and expenses. This decision helped us improve procedures in the no profitable section and increase revenue, especially from the sale of repossessed assets. Under the long-term strategy of the bank, we continued to offer domestic companies in the food and medical industries different services such as financing development projects, provision of revolving funds, and loans for the purchase of commodities. In order to strengthen our strategic approach in offering service to the added value chain, we tried to identify active chains in food and medicine and to target production, distribution, and sale procedures with particular attention to food, medicine, and home appliances, directing our support toward optimizing the financing cash flow for these economic sectors. The collective efforts of our colleagues across all departments have resulted in many achievements in different areas. Saman’s Customer Complaint system obtained ISO certification, and Saman’s position improved four steps among the 100 superior companies in Iran. At this time, the bank stands in 20th place. According to the Saman 2021 Strategic Plan, we strive to improve the speed and quality of our services to retail banking customers, premium customers, and private banking customers by developing the necessary electronic Key Figures infrastructure and tools to provide customers with advisory and value-added services in banking, insurance, and (Adjusted) customer club benefits. The Saman Board endeavoured to create a new concept of banking services in the form of a financial supermarket, based on our excellent international and domestic capacity buildings and in view of our 2017/18 2016/17 2015/16 customers’ needs. Consolidated Bank Consolidated Bank Consolidated Bank Key Performance indicators As we approach the 20th anniversary of Saman Bank, we note with pride the valuable achievements and IRR billion during the year experiences we have secured, which would have been impossible without the sincere support of all our Net revenue from lending shareholders. These achievements have now placed Saman among the most reputable and highly regarded (14,183) (14,243) (7,667) (7,694) (662) (611) Iranian brands inside and outside of Iran. With the help of forward-looking strategic planning as well as highly and deposits trained and motivated workforce, this background can guarantee continued success for Saman in the future Net revenue from fees and charges (248) (311) (318) (514) 13 (28) 50 years. Total operating revenues (2,498) (2,766) (3,149) (1,789) 2,097 1,255 Net profit(loss) 823 1,018 (1,866) 85 450 103 Key items in balance sheet IRR billion Saman Bank Board of Directors Lending and claims 137,341 137,837 127,532 127,750 126,692 126,988 Total assets 309,313 310,339 257,639 258,035 260,670 257,555 Total deposits 26,455 26,399 17,071 17,063 21,806 21,885 Total debts 46,695 44,625 34,447 31,977 56,965 53,768 Investors' equity 253,176 254,382 213,714 214,853 193,509 194,174 Paid capital 8,000 8,000 8,000 8,000 8,000 8,000 Shareholders' equity 9,442 11,331 9,478 11,205 10,196 9,614 Return Rate Percentage Return on Asset 0.27 0.33 (0.72) 0.03 0.17 0.04 Return on Net Worth(ROE) 8.72 8.99 (19.68) 0.76 4.4 1.1 Performance per share
Number of shares 8,000,000,000 8,000,000,000 8,000,000,000 8,000,000,000 8,000,000,000 8,000,000,000 Basic earnings per share IRR 98 127 (239) 11 58 14 Diluted earnings per shar IRR 98 127 (239) 11 55 13 Dividend per share IRR 0 0 0 0 0 80 Other information Personnel 3229 2419 3100 2406 3581 2475 Number of branches 0 136 0 137 0 141
6 Annual Report 7 | Capital At the time of registration, the bank’s capital was IRR 200 billion (divided into 200 million shares, each of IRR 1,000 nominal value). This has subsequently increased, as follows:
Date of capital increase Increase New capital Source of increase percentage IRR billion 29/08/2002 0 200 Liquidated claims and shareholders' equity 27/11/2003 10 220 Liquidated claims and shareholders' equity 14/10/2004 36.4 300 Shareholders' equity 03/07/2005 100 600 Liquidated claims and shareholders' equity 16/11/2005 25 750 Liquidated claims and shareholders' equity 10/08/2006 20 900 Liquidated claims and shareholders' equity 13/01/2010 100 1800 Liquidated calims & shareholders' equity & denying rights of preference 20/03/2011 66.7 3000 Liquidated claims and shareholders' equity 19/03/2012 33.3 4000 Shareholders' equity 21/10/2012 64.7 6588 Surplus of assets revaluation 03/09/2016 21 8000 Shareholders' equity and accumulated profit
| Shareholder Structure The list of Saman shareholders as at the end of the financial year 2017/18 is presented in the following table. About Saman Bank Shareholder 20/03/2018
Saman began official activity on 2 September 1999 as the first credit institution in post-revolutionary Iran under Number of Shares Percentage the name Saman Eghtesad. Saman Eghtesad was registered with the Corporate and Non-commercial Entities Pension Fund of National Iranian Copper Industries Company 624,530,308 7.81 Register under number 154444, with an initial capital of IRR 11 billion. Steel Industries Pension Fund 400,088,117 5.00 Mines and Metals Development Investment Company (Public Joint-Stock) 323,686,501 4.05 In September 2002, Saman Eghtesad had accumulated sufficient capital to obtain a banking license from the Central Bank of the Islamic Republic of Iran. This opportunity allowed the institution to enter a new phase of its life Mohammad Zarrabieh 315,266,280 3.94 as a privately-owned bank. Saman Investment Development Company 239,999,995 3.00 Havva Chayi Dehkhuyi 214,211,112 2.68 Vali Zarrabieh 201,660,057 2.52 | Scope of Activities Seyed Mehdi Ghafouri 181,316,669 2.27 The bank’s scope of activities is detailed in Article 3 of the Memorandum of Association. A summary is presented Seyed Ahmad Akhavan Dastmalchi 166,800,291 2.09 below: Other individual shareholders 3,820,943,944 47.76 Other corporate shareholders 1,511,496,726 18.89 • Opening and maintaining different types of bank accounts, including current and savings accounts; 8,000,000,000 100 • Accepting term deposits and issuing deposit certificates; • Providing loan and finance products within the framework of rules and regulations and the standards of non-usurious banking laws; | Individual and corporate share ratio Operating in currency markets domestically and internationally; • 20/03/2018 20/03/2017 • Administering all types of credit instruments, including documentary letters of credit; Number of Number of Number of Number of Percentage Percentage • Opening L/C and different types of guarantee letters; Shareholders Shares Shareholders Shares Individual 4246 4,791,009,605 59.89 4150 4,821,199,561 60.26 • Issuing and trading bonds; Corporate 71 3,208,990,395 40.11 69 3,178,800,439 39.74 • Offering partnership and investment opportunities; 4317 8,000,000,000 100.00 4219 8,000,000,000 100.00 • Offering various payment and e-banking tools; • Engaging in any other banking and business activity allowed under relevant rules and regulations.
Corporate 40.11 Individual 59.89
8 Annual Report 9 | Our Vision Saman’s vision on the horizon of 2018/19 – 2021/22 is as follows: • To serve as the first choice in Iranian banking for different groups of customers • To operate as the first-choice banking partner for overseas banks • To maintain the bank’s position as a first-choice employer for the most talented banking professionals
| Our Mission and Values Saman Bank strives to create real added value for its customers and to encourage their loyalty through the consistent delivery of quality services that are defined by convenience, speed, and reliability. To these ends, we introduced and continue to uphold the following core values: • Customer-centric culture • Capable human capital • Transparency • Professionalism
| Our Priorities • Customer-centric organisational activities • Sustainable growth and profitability of the main activities of the bank • Improvement of the structure of the bank’s balance sheet (concentrating on reducing the share of nonprofitable assets)
| Strategic Goals • To expand our touch point with customers and to offer speedy services • To offer 7/24 services through electronic channels • To enhance our performance management system • To reduce resource costs • To grow current accounts • To grow commissions and fees • To reduce noncurrent claims
| Strategic Directions of Saman toward Horizon 2021 • Sustainable profitability of the bank’s core business through innovation and new products based on customer categorization strategy • Enhanced operational efficiency through simplification and specialization of activities and procedures • Improved performance management system to create business value
10 Annual Report 11 • The Direct Taxation Act passed in 2015 and its subsequent amendments; • Law on Counter-Terror Financing adopted on 12 March 2016; • Law for Development of Production and National Financial System adopted on 12 May 2017; • The By-Law on Enforcing Legally Binding Documents; • Article 34 of the Registration Act as amended; • By-laws and guidelines circulated by the Central Bank of Iran; • By-laws and guidelines circulated by the Securities and Exchange Organisation; • General policies adopted under Article 44 of the Constitution; • Monetary and Banking Act; • Law requiring issuance of national identification number and postal code to all citizens; • Approvals by the Money and Credit Council; • Saman’s Articles of Association; • Supervision packages and policies of the CBI, which act as guidelines for the bank’s operations and other legal activities during the reported year.
Saman’s position in the Securities and Exchange Organisation
According to notification number 900-851 dated 16 November 2011 by Iran Fara Bourse, Saman was listed in the Banks and Credit Institutions group as the 49th stock symbol (29th company in the first market) and was assigned the stock symbol ‘ZeSaman’. On 7 June 2013, Saman Bank’s listing was transferred to the main market of the Iran Stock Exchange as per IFB’s letter no. 91/03/3035.
The Bank’s Legal Environment The following laws and regulations are the most important rules governing Saman’s activities: • Commercial Code passed in 1932 and its subsequent amendments; • The Monetary and Banking Act of Iran ratified in 1972 and its subsequent amendments; • The Banking Regulations Act passed in 1979; • Law banning Bank Borrowers from leaving the Country passed in 1980; • The Law for Usury (Interest) Free Banking ratified in 1983; • The Law annexing two notes to Article 15 of the Law for Usury (Interest) Free Banking as amended in 1997; • The Law permitting the Establishment of Privately-Owned Banks passed in 2000; • The Cheques Act passed in 2003; • E-Commerce Law passed on 25 January 2004; • The Law pertaining to Non-Regulated Money Markets passed in 2004; • Negotiable Instruments Market Law passed on 22 November 2005; • Law adjusting Bank Loan Interests to the Return Rate in Different Economic Sectors passed in 2006; • The Anti-Money-Laundering Act passed in 2007;
12 Annual Report 13 An Overview of Saman’s Operational and Financial Performance
| Balance Sheet Items
20/03/2018 20/03/2017 19/03/2016
Percentage Percentage IRR billion Percentage Increase (decrease) compared IRR billion Percentage Increase (decrease) compared IRR billion with previous year with previous year
Assets Assets Cash 36,749 11.84 16.68 Cash 31,495 12.21 (36.20) 49,362 Due from banks and other credit institutions 10,688 3.44 10.46 Due from banks and other credit institutions 9,676 3.75 (24.60) 12,834 Loans and advances to customers 137,837 44.41 7.90 Loans and advances to customers 127,750 49.51 0.60 126,988 Investment in stocks and securities 13,436 4.33 383.69 Investment in stocks and securities 2,778 1.08 (14.23) 3,239 Due from subsidiaries and affiliates 2,929 0.94 4.49 Due from subsidiaries and affiliates 2,803 1.09 171.99 1,031 Other accounts receivable 40,360 13.01 69.13 Other accounts receivable 23,863 9.25 322.24 5,652 Tangible fixed assets 2,973 0.96 (17.73) Tangible fixed assets 3,613 1.40 0.53 3,594 Intangible assets 2,216 0.71 (48.47) Intangible assets 4,301 1.67 4.41 4,120 Legal deposit 27,479 8.85 19.29 Legal deposit 23,036 8.93 9.01 21,131 Other assets 35,673 11.49 24.21 Other assets 28,720 11.13 (2.99) 29,606 310,339 100.00 20.27 258,035 100.00 0.19 257,555 Liabilities Liabilities Due to banks and other credit institutions 9,014 2.90 (7.62) Due to banks and other credit institutions 9,758 3.78 (63.92) 27,042 Customer deposits 26,399 8.51 54.72 Customer deposits 17,063 6.61 (22.04) 21,885 Dividends payable 52 0.02 (1.85) Dividends payable 52 0.02 (66.58) 157 Other debts and provisions 8,469 2.73 85.45 Other debts and provisions 4,567 1.77 6.99 4,269 Provision for employee termination benefits 691 0.22 28.61 Provision for employee termination benefits 537 0.21 29.59 415 Total liabilities before investment accounts equity 44,625 14.38 39.56 Total liabilities before investment accounts equity 31,977 12.39 (40.53) 53,769 Investment accounts equity Investment accounts equity Investment accounts equity 254,382 81.97 18.40 Investment accounts equity 214,853 83.27 10.65 194,174 Total liabilities 299,007 96.35 21.14 Total liabilities 246,830 84.01 (0.45) 247,942 Shareholders' equity Shareholders' equity share capital 8,000 2.58 0.00 share capital 8,000 3.10 0.00 8,000 Ongoing capital increase 0 0.00 0.00 Ongoing capital increase 0.00 0.00 0.00 0.00 Legal reserve 1,689 0.54 9.94 Legal reserve 1,537 0.60 0.83 1,524 Assets revaluation surplus 615 0.20 (59.20) Assets revaluation surplus 1,507 0.58 223,120.85 1 Retained earnings 1,027 0.33 536.38 Retained earnings 161 0.06 82.54 88 Total equity 11,331 3.65 1.13 Total equity 11,205 4.34 16.56 9,613 Total liabilities and equity 310,339 100.00 20.27 Total liabilities and equity 258,035 100.00 0.19 257,555
14 Annual Report 15 | Income Statement Information
2017/18 2016/17 2015/16 Percentage Percentage IRR billion Percentage Increase (decrease) compared IRR billion Percentage Increase (decrease) compared IRR billion with previous year with previous year Revenues Revenues Interest income 19,580 45.57 (19.27) Interest income 24,254 63 (22.24) 31,190 Fee and commission income 1,641 3.82 23.43 Fee and commission income 1,329 3.48 19.10 1,116 Net investment profit(loss) 7,839 18.24 55.70 Net investment profit(loss) 5,034 13.18 740.73 599 Net foreign currency transactions profit(loss) 3,950 9.19 185.27 Net foreign currency transactions profit(loss) 1,385 3.62 6.84 1,296 Other incomes 9,955 23.17 60.40 Other incomes 6,207 16.24 83.64 3,380 Total income 42,964 100 12.45 Total income 38,209 100 1.67 37,581 Expenses Expenses Interest paid on deposits (33,822) 80.63 5.87 Interest paid on deposits (31,948) 83.80 0.46 (31,802) Fees and commissions expenses (1,952) 4.65 5.90 Fees and commissions expenses (1,843) 4.83 61.10 (1,144) General and administrative expenses (5,147) 12.27 43.52 General and administrative expenses (3,586) 9.41 9.18 (3,285) Doubtful dues expenses (500) 1.19 66.67 Doubtful dues expenses (300) 0.79 (60.83) (766) Financial expenses 0 0.00 (100.00) Financial expenses (2) 0.00 (96.98) (59) Depreciation (525) 1.25 17.83 Depreciation (445) 1.17 5.33 (423) Total expenses (41,946) 100 10.02 Total expenses (38,124) 100 1.72 (37,478) Profit(loss)before tax 1,018 1,102.73 Profit(loss)before tax 85 (17.60) 103 Income tax Income tax Net profit(loss) 1,018 Net profit(loss) 85 103
16 Annual Report 17 | Key Performance Indicators Resource and Expense Analysis Key performance indicators for the years 2017/18 and 2015/16 are shown in the following table: | Deposits 2017/18 2016/17 Key performance indicators for attracting deposits (in Iranian and foreign currencies) are as follows: Percentage Percentage Capital adequacy ratio 5 6 Lending to deposits ratio 49.47 55.55 2017/18 2016/17 Lending to total assets ratio 44.41 49.51 Amount Percentage from Total Amount Percentage from Total Total expenditure to total revenue ratio 97.63 99.78 IRR billion IRR billion Demand deposits-IRR 11,745 4.22 9,219 4.01 Debt ratio 14 12 Saving deposits and similar accounts-IRR 6,399 2.30 541 0.24 Assets return ratio 0.33 0.03 Term deposits-IRR 226,857 81.42 197,056 85.68 Return on capital ratio 12.7 1.06 Foreign currency deposits 32,324 11.60 22,448 9.76 Total deposits to total assets ratio 89.78 89.13 Other deposits-IRR 1,291 0.46 725 0.32 Total deposits to capital ratio 3482.71 2874.87 278,617 100 229,989 100 Loan interest to total revenues ratio 45.57 63.48 Devidend to total expenditures ratio 80.63 83.80 Deubtful dues expense to total expenditures ratio 1 1 0.79 || Interest-Bearing versus Non-Interest-Bearing Deposits ||
2017/18 2016/17 2017/18 2016/17 Amount Percentage from Total Amount Percentage from Total IRR billion IRR billion IRR billion IRR billion Deposit per branch ratio 2,049 1,655 Interest-bearing deposits 252,217 90.52 212,927 92.58 Lending per branch ratio 1,014 919 Non-interest-bearing deposits 26,399 9.48 17,063 7.42 Net profit per branch ratio 7 1 278,617 100 229,989 100 Deposit per average employee size ratio 116 95 Lending per average employee size ratio 57 53
Net profit per average employee size ratio 0.422 0.035 || Comparison Table of Deposits ||
2017/18 2016/17 2015/16 2014/15 2013/14 IRR billion IRR billion IRR billion IRR billion IRR billion Total deposits 278,617 229,989 213,944 182,144 160,880
Percentage of change compared to 21.14 7.50 17.46 13.22 92.08 previous year
|| Deposits ||
300,000
250,000
200,000
150,000
100,000
50,000
0 2013/14 2014/15 2015/16 2016/17 2017/18
|| Saman Bank Deposite compared with the Iranian Banking System's Total Lending ||
2017/18 2016/17 2015/16 2014/15 2013/14 IRR billion IRR billion IRR billion IRR billion IRR billion Saman Bank Lending 278,617 229,989 213,944 182,144 160,880 Total Banking System Lending 16,464,055 12,728,364 10,619,015 8,192,761 6,844,166
Percentage of Saman's Share of 1.69 1.81 2.01 2.22 2.35 total Lending
18 Annual Report 19 | Lending | Interest paid to investment deposits The following is a summary of Saman’s performance indicators for lending: Interest paid to investment deposits during financial years 2017/18 and 2016/17 are as follows:
2017/18 2016/17 2017/18 2016/17
Percentage Percentage Percentage Percentage Amount Amount Amount Amount from Total from Total from Total from Total
IRR billion IRR billion IRR billion IRR billion Installment sale loan 9,264 6.7 6,652 5.2 Short-term investment deplosits 10,418 30.80 13,636 42.68 Joala(commission-based contract)loan 22,456 16.3 7,505 5.9 One-year investment deposits 19,896 58.83 13,438 42.06 Ijara(lease ending with ownership)loan 2,307 1.7 2,089 1.6 Two-year investment deposits 0 0.00 0 0.00 Qard al-hasan(interest-free)loan 1,396 1.0 764 0.6 Three-year investment deposits 0 0.00 0 0.00 Mudaraba(trust financing contract)loan 9,898 7.2 11,991 9.4 Four-year investment deposits 12 0.04 15 0.05 Diminishing Musharaka(co-ownership)loan 76,120 55.2 86,278 67.5 Five-year investment deposits 3,027 8.95 4,318 13.51 Dept purchase 8,381 6.1 5,658 4.4 Deposit certificates 0 0.000 0 0.00 Foreign currency loan 5,598 4.1 4,786 3.7 Termed deposits of banks and other credit instituions 26 0.08 141 0.44 Letters of credit issued 1,307 0.9 1,345 1.1 Foreign currency deposits 443 1.31 401 1.25 Letters of guarantee issued 640 0.5 536 0.4 33,822 100 31,948 100 Others 470 0.3 148 0.1 137,837 100 127,750 100 | Revenue from lending Revenues earned from loans granted in financial years 2017/18 and 2016/17 are as follows: || Comparison Table for Lending ||
2017/18 2016/17 2017/18 2016/17 2015/16 2014/15 2013/14 Percentage Percentage IRR billion IRR billion IRR billion IRR billion IRR billion Amount Amount from Total from Total Total Lending 137,837 127,750 126,988 118,112 103,095 IRR billion IRR billion Percentage of change compared to previous year 7.90 0.60 7.52 14.57 53.98 Installment sale loan 1,184 6.50 819 3.65 Joala(cmmission-based contract)loan 2,144 11.76 486 2.17 Ijara(lease ending with ownership)loan 69 0.38 87 0.39 || Deposits || Mudaraba(trust financing contract)loan 991 5.44 1,910 8.52 140,000 Diminishing Musharaka(co-ownership)loan 12,417 68.14 17,188 76.67 120,000 Dept purchase 776 4.26 910 4.06 100,000 Penalty clause 460 2.52 536 2.39 80,000 Foreign currency loans 62 0.34 83 0.37 60,000 Others 121 0.66 401 1.79 40,000 18,224 100 22,420 100 20,000
0 2013/14 2014/15 2015/16 2016/17 2017/18
|| Saman Bank Lending compared with the Iranian Banking System's Total Lending ||
2017/18 2016/17 2015/16 2014/15 2013/14 IRR billion IRR billion IRR billion IRR billion IRR billion Saman Bank Lending 137,837 127,750 126,988 118,112 103,095 Total Banking System Lending 12,587,132 9,866,616 7,916,102 6,739,744 5,719,260 Percentage of Saman's Share of total Lending 1.10 1.29 1.60 1.75 1.80
20 Annual Report 21 || 5year Comparison Table of Card Reader Numbers ||
2017/18 2016/17 2015/16 2014/15 2013/14 Number 214,514 203,311 201,027 195,308 159,462 Percentage of change compared to previous year 5.51 1.14 2.93 22.48 40.76
|| Number of Card Readers ||
250,000
200,000
150,000
100,000
50,000
0 2013/14 2014/15 2015/16 2016/17 2017/18
|| 5year Comparison Table of ATM Numbers ||
2017/18 2016/17 2015/16 2014/15 2013/14 Number 1459 1458 1303 1224 1006 Percentage of change compared to previous year 0.07 11.90 6.45 21.67 50.60
|| Number of ATMs ||
1600 1400 1200 Major Achievements of Bank in Different Areas 1000 800 600 | Electronic banking 400 • Collecting and replacing 200 low-productivity ATMs, also achieving the target coverage for growth of the 200 ATM commission revenue number up to %92; 0 2013/14 2014/15 2015/16 2016/17 2017/18 • Launch of foreign currency ATMs; • Launch of cashless ATMs; || 5year Comparison Table of Debit and Credit Card Numbers || • Launch and support of CDS (Cash Deposit Systems); • Launch and support of CRS (Cash in & Cash out) systems; 2017/18 2016/17 2015/16 2014/15 2013/14 • Sale of banking web services to more than 80 corporate customers; Number 1,293,431 1,384,438 1,742,387 2,010,187 1,570,922 Percentage of change compared to previous year (6.57) (20.54) (13.32) 27.96 (41.26) • Collecting 40,000 inactive card readers and marketing for and installing 50,000 new card readers with the aim of achieving %5 growth compared with the previous year;
• Launch of MONIES electronic wallet (a collective project of Saman Bank, Kish Cell Pars Co., and Saman || Number of Debit and Credit Cards || Electronic Payment Co.); • Launch of the Mobillet (Mobile Wallet) application; 2,500,000 2,000,000 Launch of RighTel top-up; • 1,500,000
• Launch of services related to payment of Samantel phone bills through electronic gateways; 1,000,000 • Launch of two-sided payment card service and service for four banks and nine PSP companies; 500,000 Launch of the pay-in system with payment reference through ATMs. 0 • 2013/14 2014/15 2015/16 2016/17 2017/18
22 Annual Report 23 || 5year Comparison Table of Virtual Banking Customer Numbers (Person) ||
2017/18 2016/17 2015/16 2014/15 2013/14 Person Person Person Person Person Net Bank 936,773 859,332 780,333 683,845 570,238 SAMANAK 682,485 559,461 453,379 344,496 231,741 Telephone Bank 880,934 863,763 836,264 789,270 712,431 2,500,192 2,282,556 2,069,976 1,817,611 1,514,410 Percentage of change compared to previous year 9.53 10.27 13.88 20.02
|| Number of Virtual Banking Customers ||
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0 2013/14 2014/15 2015/16 2016/17 2017/18
| Corporate Banking • Corporate NetBank project became operational; • MT940 system (used by the SWIFT network to send and receive end-of-day bank account statements) became operational; • Foreign currency operations (L/C, money order, and draft) increased to USD 5 billion; • Balance of resources on 20 March 2018 amounted to IRR 24,000 billion; • New Lones,IRR 42,000 billion; • 1,200 PDA POS systems launched, which can be increased to 10,000 systems; • Undertook guarantee for bonds published by Rayan Saipa Leasing Company in the amount of IRR 1,500 billion; • International customer office opened.
| Premier and Private Banking • Offered 4041 bookings of CIP services and 3974 bookings of airport transport services; • Offered 2568 bookings of travel services including air tickets, domestic and international tours, and accommodations; • Contracted with Mehrabad Airport CIP to offer their services to premium customers; • Contracted with Imam Khomeini CIP Lounge to offer their services to premium customers; • Master Card services to premium customers; • Issued 3551 golden cards and 521 black cards for premier and private banking customers, respectively; • Issued 2557 insurance policies including complementary health insurance, third-party and comprehensive car insurance, and travel insurance policies; • Issued 697 complementary health insurance premiums for premium customers against zero-cost deposits, thereby attracting IRR 27.8 billion zero-cost deposits; • Issued 75 discounted health cards to premium customers in order to buy various types of insurance; • Organised a co-branding exhibition with Monsoon Group and many other big brands in March 2018 with 300 premium customers invited; • Gifts sent to loyal customers on the occasion of the Iranian New Year; • Loyalty cards issued to premium customers (Customers’ Club) and subsystem added to the Customers’ Club site.
24 Annual Report 25 The following table shows the sale of financial and investment services:
Name of Product Amount Invested by Premium Customers IRR million Amin Saman Mutual Fund 2,636,267 Negin Saman Mutual Fund 5,976,651 Portfolio Management 40,526
Beginning of the Year End of the Year IRR billion IRR billion Resources of Premium Customers 59,633 74,173 Resources of VIP Customers 27,421 37,729 Total Assets of Premium Customers 87,054 111,902
Beginning of the Year End of the Year Number of Premium Customers 6,847 8,324 Number of VIP Customers 376 476 Total Number of Premium Customers 7,223 8800
| Retail Banking • Considerably increased zero-cost resources; • Reduced price of resources; • Organised four quarterly assemblies attended by branch managers and supervisors; • Expanded ATM support network to improve productivity; • Optimised service network by opening 13 new centres; • Piloted Saman 2021 Sale Model Project in Mulla Sadra and Mirdamad branches; • Cooperated with GFK Company on a project to boost customer satisfaction and brand exposure.
| Microcredit and SME Loans In order to increase non-joint revenues, we reduced the amount of cash deposits for guarantee letters requested by our customers and increased powers of branches in issuing bid bonds to the level of IRR 50 billion. As a result, the targets set for the financial year 2017/18 were fully met. Revenue from loans reached IRR 42,236 billion, and revenue from issuing guarantee letters reached IRR 5,457 billion, showing respective growth rates of 14.59% and 75.56% compared to the previous year. The bank issued hundreds of small loans as part of our social responsibility scheme. In fact, 8,040 marriage loans (interest-free) totalling IRR 841,600 million were paid to eligible newlywed couples. Low-income families in receipt of benefits from Imam Khomeini Relief Committee received IRR 75,878 million in the form of 478 interest-free loans, and 218 other interest-free loans amounting to IRR 29,475 million were awarded to those covered by the State Welfare Organisation. Loan applications by small and medium-sized enterprises introduced by the Business Development Committee were admitted and processed as requested by the Central Bank. In order to reduce credit risk and increase control of the lending procedure, the bank developed the first credit system with the help of Saman Processing Company and the Quality Improvement Unit. This ‘Self-employed Lending System’ became operational in all branches on 23 October 2018. A second system to respond to the personal loan applications is in process and will be ready to deploy during the first half of financial year 2018/19. A similar system for legal entity business lending will be designed subsequently.
26 Annual Report 27 | International Banking Long-term, medium-term, and short-term financing contracts The International Banking Department succeeded to sign the following medium-term and long-term financing agreements during 2017/18:
Type of Contract Name of the Bank Country Amount Date Signed
Medium-Term Finance K-Exim South Korea € 8 billion 28/08/2017 Medium-Term Finance Ober Bank Austria € 1 billion 21/09/2017 Medium-Term Finance Danske Bank Denmark € 500 million 21/09/2017 Long-term Finance Invitalia Global Investment S.p.a Italy € 5 billion 03/10/2018 Short-term Refinance Melli Bank Plc United Kingdom € 20 million 14/02/2018 Short-term Refinance Iran-Europe Commercial Bank - € 20 million 13/02/2018 Short-term Refinance Persia International Bank (PIB) United Kingdom € 4 million 03/03/2018
Correspondent Relations The International Banking Department entered into 6 new correspondent banking agreements in different parts of the world. We also opened accounts with 9 new banks. Our current correspondent banking network includes more than 300 banks.
Foreign Currency Operations • Our approved revenue from foreign currency operations in 2017/18 budget was the sum of IRR 2,000 billion. We are proud to declare that we achieved a total revenue of IRR 3069 billion (%153 above the approved target) in 2017/18. • Our share of foreign currency operations was %10.67 of the total operations in the Iranian banking system. The CBI’s reports show that this share was due to our excellent record of foreign currency operations including L/C, bills of exchange, and money orders, earning Saman the first rank among its competitors. Since banks previously sanctioned had re-entered the foreign currency market this year, this is a major accomplishment for Saman. Foreign currency operations during the past five years are summarised in the following table:
2017/18 2016/17 2015/16 2014/15 2013/14 USD thousand USD thousand USD thousand USD thousand USD thousand Import letters of credit 721,547.26 502,813.68 518,183.55 1,396,202.96 1,189,815.54 Import bils of cxchange 264,788.88 291,961.50 47,113.78 46,267.98 284,308.08 Letters of guarantee 54,361.45 32,147.71 13,376.36 20,432.47 12,520.94 Incoming international money orders 2,881,572.55 1,749,914.42 3,585,331.59 3,835,947.96 1,457,038.19 Outgoing international money orders 5,304,209.95 4,793,457.63 3,267,209.90 4,463,985.81 4,574,919.04
28 Annual Report 29 | Investments | Stock market The performance of export companies including petrochemical companies and those active in essential International economic outlook commodities such as metals were influenced by the value of USD against IRR, as well as by the global prices The International Monetary Fund predicted growth in economic activities for 2017 and 2018. In the latest global of metals. Consequently, the Tehran Stock Exchange experienced an increase of index from 77,230 units at the economic growth forecasts, it projected growth rates of 3.5% and 3.6% for 2017 and 2018, respectively. A major beginning of 2017/18 to 96,289 units by the end of the same financial year. part of economic growth is attributed to the positive performance of newly emerging markets and developing The following table summarises the most important indexes of the capital market during the past two years: economies.
Oil markets: Following the agreement for reduced production among OPEC members and Russia and the Index Unit 20/03/2018 20/03/2017 Percentage of Change devaluation of USD during 2017, oil prices rose above USD 65 per barrel. During early 2017, oil prices dropped TSE Index Unit 96,289 77,230 24.6 in a reaction to prospects of increased output in Nigeria, Libya, and a few other oil-producing countries. Higher demand levels and producers’ continued adherence to their reduced production agreement gradually IFB (Iran Fara Bource) Index Unit 1,096 881 24.4 increased the oil prices during the second half of the year. The average price during the year has been USD 53.5 Price Index (value-weighted) Unit 30,533 26,826 13.8 per barrel. Market Value IRR billion 3,822,856 3,220,045 18.7 The same trend is predicted to continue into 2018, but the increasing production of America’s shale oil should be taken into account. The following diagram shows the OPEC basket price (USD per barrel) during 2017. In order to optimise Saman’s portfolio, we were inclined to invest in companies and industries of higher liquidity. As a result, the average price-to-revenue ratio fell during the reported year. Under this strategy, we have tried to 70 invest in companies who show a good prospect of growth in addition to paying dividends.
65 | Saman portfolio management
60 The following diagram shows the structure of Saman’s investment portfolio at the end of 2017/18:
55 9.80%
50 13.54% Mutual Fund Units 45 38.80% Claims
40 Shares
January February March April May June July August September October November December Fixed Income Securities
Base metals markets: In 2017, base metals experienced regular growth and partially offset the drop in price that had begun in late 2011. This growth has been attributed to various reasons, the most important of 38.58% which are the support for policies of the Chinese government to maintain its economic growth rate, reduced value of USD index, reduced surplus supply and reduced stock in metal warehouses in the commodity markets following extensive mine closures and numerous industrial actions, victory of President Trump in Some key performance indicators of Saman’s investment portfolio are presented in the following table: the U.S. elections and his promises to reduce corporate tax rates and invest USD 1000 billion in the country’s infrastructure, and increased oil prices. During the reported year, aluminium and copper had the best Cost Price Mean Capital Total Profit (loss) performance in view of price among other metals. Percentage of change Percentage of change IRR million IRR million IRR million compared to previous year compared to previous year
| Iranian economic developments 2013/14 1,435,227 0 719,281 0 467,670 Based on the latest information released by the Central Bank of Iran, the Iranian economy experienced 3.4% 2014/15 1,235,746 (14) 1,498,038 108 (266,921) growth during the first nine months of the financial year 2017/18, which is higher than predicted. The most 2015/16 1,139,604 (8) 924,998 (38) 144,372 significant factors influencing this positive growth were the construction sector and the increased prices of oil 2016/17 575,652 (49) 1,631,625 76 138,808 and exported raw materials. The International Monetary Fund (IMF) confirmed that Iran was able to maintain its 2017/18 860,499 49 705,145 (57) 7,001 position as the world’s 18th largest economy in 2017. In their latest economic forecast, the IMF predicted a growth rate of 3.8% for the Iranian economy in 2018. In spite of relative improvements in oil exports during the reported financial year, the Iranian economy had to face | Social responsibility a number of serious challenges, including the high volumes of deferred debts owed by banks, high interest rates alongside deferred debts owed to banks by the government sector, and uncertainties in regard to the complete Investment plans for social responsibility lifting of economic and banking sanctions. Saman supported investment in charitable plans such as the Agah Charitable Fund, thereby sponsoring charitable initiatives for social housing for individuals covered by the Social Welfare Organisation. We also participated in supporting the Nikandishan Honar Charitable Fund, which supports artists, writers, and journalists in need of financial assistance.
30 Annual Report 31 | Inspection and Compliance • Compl etion of phase one of the audit by the Ernst & Young team and application of necessary changes to the compliance and internal control procedures and directives; • Design, analysis, implementation, and commissioning of Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD) solutions; • Implementation of BOOTSTRAP -3based and JQUERY-based user-friendly interfaces for fraud detection software in order to provide easier access to different sections; designing and developing the second version of smart control software in foreign currency, Iranian currency, loans, and customer sections; • Implementation of RTAC1 software in order to control a wide range of operational accounts (debtors’ accounts, fines, interbank checks, etc.) and transactions on customer deposits; • Initiation of the second phase of the audit by the Ernst & Young team on inspection and compliance procedures; • Employment of control rules on foreign currency transactions aimed at facilitating control and minimizing the need for physical inspection as well as saving financial resources; • Wide participation of staff in retail banking courses organised and offered by Retail Banking Academy as well as in courses on compliance and financial crime prevention by the International Compliance Association (ICA); • Updates to the bank’s compliance procedures in light of the latest international developments based on Omni Enterprise standards.
| Financial Management • In spite of the reduced interest rate on deposits, and while most other commercial banks experienced a negative balance in their central bank’s account, Saman did not experience a cash shortfall and had no negative account, even for a single day. Saman responded to all the monetary needs of its customers nonstop during the year through SATNA, PAYA, and SHETAB operations; • During the reported year, Saman was a depositor in the interbank market for 351 days and became a receiver of deposits only for 14 days due to exceptional market conditions; • The revenue from the interbank market in 18/2017 amounted to IRR 1,012 billion. Proposals for investment in other sectors are submitted to the Assets and Debts Committee. Investments will be made by the Investment Department after approval by this Committee; • The Liquidity Management Project was introduced to develop and execute a new business model involving the use of self-service express banking machines; • The operational program for 19/2018 was devised and circulated; • Managerial reports regarding deposits, cost price, and branch profitability records were prepared and submitted; • Any deviation from budget and program in the bank and its branches was properly reported; • Income tax and tax on conveyances and personnel salaries for tax year 2016/17 were settled and paid; • Taxes on conveyances and personnel salaries for tax year 2015/16 were settled and paid; • The bank collaborated regularly in drafting, executing, and maintaining control of the Saman 1400 Project; • The bank collaborated with Capital Intelligence in Saman’s credit rating.
32 Annual Report 33 Corporate Governance Board Meetings During the reported year, the Board met 68 times (minimum one meeting per week) and adopted decisions on | Board of Directors major issues within the bank. Executive Compensation • The Board of Directors approves the CEO’s salary, benefits and bonuses. Vali Zarrabieh, Chairman • The Annual General Meeting approves bonuses for the Board of Directors in compliance with the provisions of the Commercial Code. The Board decided at the reported year’s AGM not to take any bonus. Mr. Zarrabieh, also a board member of Saman Electronic Payment Company and Saman Brokerage Company, served as the first Deputy CEO of Saman Bank and was appointed CEO in June 2010. In 2013, he was elected Chairman of the Board. Mr. Zarrabieh holds a | Board Committees master’s degree in finance from the CASS Business School of London, specializing in corporate finance and valuation, as well as an MBA from Manchester Business School, UK, specializing in strategy. Strategy and Budget Committee Members of the Committee: Two members of the Board, Senior Advisor to the Board, CEO or Deputy CEO, VP Finance and Planning Objectives of the Committee: To ensure the bank’s survival and profitability by aligning its organisational structure and strategies with the desired status and its objectives, mission, and vision. Ahmad Mojtahed, Vice Chairman A former Head of the Monetary and Banking Research Academy (MBRA) Audit Committee and Advisor to the Governor of the Central Bank of Iran and to the Minister of Economic Affairs and Finance, Dr. Mojtahed joined Saman Members of the Committee: Two members of the Board, four advisors to the Board in March 2010 as Vice President of Planning and Development as well Objectives of the Committee: To help the Board oversee the efficiency of the internal control system, as Chairman of the Board of the Iranian Credit Bureau and Credit financial reporting processes, and proper functioning of accounting systems and financial controls to ensure Scoring Company. He was elected Chairman of Saman Bank’s Board of accurate financial statements as well as full compliance with relevant laws and regulations, supervisory Directors in September 2012, serving as the Vice Chairman since March requirements, and the bank’s policies. 2014. With a PhD in Economics from Iowa State University, USA, Dr. Mojtahed also enjoys a successful academic career as a researcher and professor at Allameh Tabatabaei University. Risk Committee Members of the Committee: Three members of the Board (Chairman, Vice Chairman, and one member), Risk Senior Advisor to the Board Objectives of Committee: To oversee that the risk management policies and processes are all up-to-date and correctly observed, to supervise implementation of policies and directives adopted by the Committee and the Board, to ensure that a desirable capital adequacy ratio is maintained, and to adopt necessary Farideh Geraminejad, Member measures to preserve and improve the bank’s reputation. Before joining the board, Ms. Geraminejad served as Saman’s Secretary of the Committee: Mr. Manouchehr Dabirian International Banking Director. She worked at Tejarat Bank from 1977 to 2009 where her latest position was the Head of Treasury and Correspondent Relations. Ms. Geraminejad holds a bachelor’s degree Human Resources Committee in General Linguistics from the University of Tehran. Members of the Committee: Two members of the Board, Senior Advisor to the Board, CEO or Deputy CEO, Human Resources Director (with no voting right) Objectives of Committee: To plan for recruitment, development, training, and maintenance of human capital in order to create sustainable value toward fulfilment of the bank’s objectives and policies. Secretary of the Committee: Human Resources Director
Gholamreza Khalili Arjmandi, Member Information Technology Committee Dr. Gholamreza Khalil Arjmandi has served as a Director and Vice President of Finance and Investment in Saderat Bank, Shahr Bank, and Members of the Committee: One member of the Board, VP of Information Technology, and CEO of Saman TOSE-EH Credit Institute since 2007. He has also been a board member Processing Company. In addition to principal members, IT Director and one representative from Business and Chairman of the Audit Committee in Securities and Exchange Banking will attend the meetings but will not have voting right. Organisation. He joined Saman’s board in July 2016. Dr. Arjmandi holds Objectives of Committee: To align the bank’s objectives with new advancements in information technology, a DBA degree and a PhD in Economics. He is also a faculty member to ensure Saman’s competitive advantage through concentrated decision making, and to improve the speed at Islamic Azad University and the licensee and manager of the of responding to stakeholders’ demands by adopting correct IT policies. Eghtesad-e Khallagh (Creative Economics) journal. Secretary of the Committee: IT Director
34 Annual Report 35 Senior Executive Team
| Seyed Ahmad Taheri Behbehani; CEO With over half a century of experience in the banking industry, Mr. Taheri Behbehani has held the position of CEO of Saman since 2013. He was employed since 2011 as Senior Executive Advisor to the Board. His career highlights in managerial, advisory, and executive positions include CEO of Eghtesad Novin (EN) Bank, CEO of Bank of Sharjah, CEO of Iran Overseas Investment Bank in London, and regional manager of Bank Melli Iran branches in the Persian Gulf, Dubai, and Abu Dhabi. Mr. Taheri Behbehani holds a bachelor’s degree in English language and literature from Shiraz University.
| Alireza Marefat; Deputy CEO Mr. Alireza Marefat was appointed Deputy CEO in February 2018. His former positions at Saman include VP Lending, Deputy Director and Director of Corporate Banking, Head of High-Net-Worth Client Credit Scoring, Deputy Director of SME Lending Support, and deputy branch manager. Mr. Marefat holds an MBA from Multimedia University, Malaysia.
| Javad Goharzad; Director of Internal Audit and Control Mr. Javad Goharzad has held the position of Director of the Internal Audit and Control Unit since 2007 and reports directly to the Board of Directors. He received a master’s degree in accounting from Islamic Azad University. Mr. Goharzad is a certified accountant and auditor and a member of numerous professional bodies, | Internal Audit and Control including the Iranian Association of Certified Public Accountants (IACPA), the Iranian Institute of Certified By adopting a systematic and effective approach, the Internal Audit and Control group improves the efficiency of Accountants (IICA), the Institute of Internal Auditors (IIA), and the Iranian Association of Official Experts (IAOE). the bank’s governance system, risk management, and control. The senior management of Saman appreciates the importance of internal auditing as a key principle in corporate governance. With this in mind, they strive to ensure that all of the departments and units within the organisation | Reza Isfandyari; Executive VP Legal are fully aware of the role and value of internal audits and make timely and effective use of internal audit findings Mr. Isfandyari has held the position of Executive VP Legal since August 2013. His former position was Legal to address any problems that may arise. Advisor to the CEO of Saman Bank. He holds a master’s degree in private law. The bank’s approach to internal auditing is to ensure the effectiveness of internal controls and full compliance with international standards and relevant regulations such as the updated COSO Internal Control – Integrated Framework (2013 Framework) as well as those of the Central Bank of Iran (CBI), recommendations of the Basel Committee, and requirements of the Securities and Exchange Organisation of Iran (SEO). | Mansour Momeni; VP Banking and Marketing As the executive arm of the Audit Committee, the Internal Audit and Control Unit assesses the efficiency and Mr. Mansour Momeni was appointed VP Banking and Marketing in January 2018. He has worked at Saman for effectiveness of operations, the reliability of financial reporting, and compliance with rules and regulations. many years and has held different managerial positions including Director of Public Relations and Customer Auditing reports are first discussed by the Audit Committee and then by the Board of Directors. Proper decisions Care, Deputy Director of Public Relations and Customer Development, Deputy Director of Retail Banking, and are made by the Board, which are then circulated to the executive units. One of the most important phases of audit Head of Electronic Banking Branch. He holds a bachelor’s degree in Chemistry from Arak University. work is to follow-up proper measures adopted to address the audit findings. The Internal Audit and Control Unit and the Secretary of the Executive Board carry out the follow-up in specific time frames.
In order to safeguard the interests of the stakeholders and ensure the effectiveness of internal control in | Hosein Vaez Ghamsari; VP Financial and Planning subordinate companies, internal auditing of Saman Group companies is also entrusted to the Internal Audit and Control Unit. Following the approved program, the Internal Audit and Control Unit audited the management Mr. Hosein Vaez Ghamsari was appointed VP of Finance and Planning in June 2016. He holds a master’s procedures in human resources, organisational development, financing, microcredit and SME credit, budgeting, degree in financial management. treasury, and liquidity during 2017/18. In compliance with IIA (Institute of Internal Auditors) standards and the Board’s decision, the performance of Saman’s Internal Audit and Control Unit will be assessed by Ernst & Young Consulting Services. | Aliakbar Namdari; VP Information Technology Mr. Aliakbar Namdari was appointed VP of Information Technology in March 2017. He holds a master’s degree in computer engineering (hardware) from Sharif University of Technology.
36 Annual Report 37 Division Heads Human Capital
Full Name Position Highest Academic Qualification Year Joined Saman Bank
Davoud Souri Saman Academy PhD 2014 Hassan Dehghani Zadeh International Banking Bachelor's deggree 2006 Hamid Tahamtan Legal and Contracts Master's degree 2013 Siamak Shahbazzadeh Khiavi Inspection and Compliance Master's degree 2003 Abbas Mirza Nayyeri Electronic Banking Bachelor's degree 2007 Seyed Morteza Hosseininejad Marketing and Product Development Master's degree 2003 Loghman Rahmanpour Retail Banking Master's degree 2016 Reza Shirin Goharian Microcredit and SME Lending Master's degree 2001 Ghassem Sarkhosh Investments Master's degree 1999 Marzieh Azizi Quality and Improvement Bachelor's degree 2003 Fereshteh Zarrabieh Human Resources Master's degree 2003 Mohammad Hassan Dowlati Logistics Master's degree 2003 Ehsan Turkman Finance Master's degree 2016 Mohammad Farrokhipour Corporate Banking Bachelor's degree 2002 Maziar Fozouni Premium and Private Banking Bachelor's degree 2003 Khodarahm Ghasemian Yadegari Anti-Money-Laundering Master's degree 2016 Pouran Gilasi Secretary to the Board Bachelor's degree 2009
Independent Audit Saman Bank shareholders always utilise the services of reputable, respected chartered accountants trusted by the Central Bank of Iran as independent auditors. Senior management fully appreciates the crucial role that these The bank’s human capital structure over the past three years is presented in the following table: professionals play in ensuring the credibility of Saman’s reputation and the good standing of its operations. Master's Bachelor's Associate PhD Diploma & Subtotal Total Grand Total The bank’s Audit Committee works hard to increase the reach and effectiveness of independent auditors, and it Degree Degree ensures that the bank’s financial statements present a fair and accurate picture of its performance. Lower Female 0 114 123 11 248 In 2016/17, Saman Bank’s shareholders selected the chartered accountancy practice Azmoon Pardaz Iran Staff 785 Male 7 171 199 160 537 Mashhood as its independent auditor. Azmoon Pardaz Iran Mashhood is one of the leading professional auditing 2017/18 2,419 firms specializing in banking and insurance and is recognised by the Tehran Stock Exchange and the Central Bank Female 1 172 342 12 527 Line 1,634 of Iran. The practice provides professional auditing and advisory services in assurance, investment, and internal Male 1 232 763 111 1,107 auditing. 9 689 1,427 294 2,419 Female 0 109 130 13 252 Staff 784 Male 5 152 200 175 532 2016/17 2,406 Female 1 150 371 12 534 Line 1,622 Male 1 202 772 113 1,088 7 613 1,473 313 2,406 Female 1 100 147 13 261 Staff 754 Male 5 122 207 159 493 2015/16 2,475 Female 1 129 412 14 556 Line 1,721 Male 1 177 824 163 1,165 8 528 1,590 349 2,475
38 Annual Report 39 The following table shows the structure of organisational positions during the past three years: AML Training
2017/18 2016/17 2015/16 Other training courses and the number of participants during 2017/18 are shown in the following table: Members of the Board of Directors 4 4 4 Title of the Course Number of Participants 2017/18 Man- hours 2017/18 Senior Advisors and Inspectors 27 23 18 Proressional non-banking courses 384 6,707.5 Executive Directors 25 27 27 Proressional banking courses 3,067 39,765 Deputy Executive Directors 10 11 12 Behavioral courses 311 4,848 Division Heads 32 25 28 Virtual behavioral courses 299 3,016 Deputy Division Heads 26 22 31 General courses 405 12,532 Unit Managers 92 95 94 General English 193 5,892 Experts 379 408 379 Virtual training courses 1,576 4,574 Regional Managers 9 10 10 6,235 77,334.5 Branch Managers 146 143 147 Branch Deputy Managers 143 146 143 Bank Clerks 1,171 1,101 1,187 Administrative Staff 322 354 360 | Major accomplishments of the Human Capital Department in 2017/18: Total Personnel and Members of the Board of Directors 2,422 2,410 2,479 • Preparing the job classification plan and having it approved by the Ministry of Cooperatives, Labour, and Social Welfare; • Identifying target groups and concluding a contract with Kish Cell Pars;
| Training and Development • Launching the Saman Academy website and application; The key training courses offered during 2017/18 were as follows: • Launching the Business Procedures Management System (BPMS); Retail Banking (RBA1) • Conducting periodic evaluations of all personnel; The Retail Banking 1 training package was introduced in 2016 and offered to a group of new recruits. It • Discounted shopping for Saman workforce through SEP card; continued in 2017 up to level 2. It was also included in the training program of branch managers, executive • Organising Saman internal futsal competitions; directors, and medium-level line managers as a collection of necessary banking skills. The course was offered to this group in 2017 and will be offered in the years to come. Two groups have been trained so far in the • Securing top positions in different futsal competitions. English language and one group in the Persian language. All course material has been translated into Persian.
Skill Test | Human Capital Department Plans for 2018/19 Implementation of SAP software; In order to assess the level of technical knowledge of branch personnel, a skill assessment test was carried • out in 2017, and the findings were utilised to improve the syllabi and educational content of our training efforts. • Collaboration in the Saman 1400 Project; Saman Academy will conduct a similar test in 2018, and the findings will be shared with the Human Resources and Retail Banking departments. • Implementation of a talent management project; • Identify key posts; Virtual Training • Introduction of a KPI-based bonus payment system; Due to the rapid advancement of educational technology and the necessity of continued learning in the financial Organisational culture documentation in view of the needs of the business and workforce; and banking industry, Saman Academy decided to produce new virtual training courses and to review existing • courses. A number of courses were added to the portfolio of Saman’s virtual training courses in 2017/18, and • New international training courses in MIM, DBA, and PHD; more will be added next year. • Obtaining ISO 29990 certification for Saman Academy; International Courses on Anti-Money-Laundering and Compliance • Launching the Saman Academy educators’ club; Staff in relevant departments passed a training course on combating financial crime and on compliance in two • Developing the research activities of Saman Bank and Saman Financial Group. groups of 10 persons each. All participants successfully passed the courses and were awarded certificates by ICA.
40 Annual Report 41 Retail Banking Division Development Division
Marketing&Product
Premier & Private Banking Division
Saman Ertebat VP Banking and
E-Banking Marketing
Corporate Banking
Project Finance Debt Collection SME Division Department Department Division VP Credit Executive Committees: • • • • • • • • • Occupational Health Debt Collection Trading SME Credit Passive Defense and Disciplinary International Banking Corporate Credit Assets and Debts and safety Security Human Capital Committe Process Management and Quality Control Software Solutions Risk Committe ICT Division VP ICT Internal Audit Division Organizational Chart-Level Organisational Structure Strategy and Budgeting Subsidiaries Division
Investments and Finance Division Human Capital and Planning Risk Unit VP Finance | Social Responsibility Unit • Donations to The Chain of Hope ( La Chaîne de L’Espoir); Board of Directors Donations to the Behnam Daheshpour Charity (children with cancer);
• Deputy CEO
Donations to the Arasteh Charity; CEO
• Foreclosed Assets Logistics Division Management • Donations to the Child Foundation; VP Logistics
• Paying heating costs for Moulanabad School; Secretarial of Passive AML/CFT Division Public Relations and Customer
• Opening a four-room school in Bahu Kalat, Sistan, and Baluchestan; defense 1 • Beginning of the project for construction of a nine-room school and a medical emergencies centre in Sarpol Corporate Secretary
Zahab city, Kermanshah Province; Legal and Contracts Support Division Debt Collection Sponsor of ski contests with the Iran-Swiss Chamber of Commerce; • VP Legal
Sponsor of Euromoney Conference. Information Technology • Strategy and Budgeting Audit Committee Executive Board Committee Committee
International Business International Banking Development Division VP International Division Information security Compliance Division Security Department VP supervision Department
42 Annual Report 43 • Review of risk-control strategies • Study of reports received on risk management • Study of risk-control-related proposals In order to execute these initiatives, the Risk Committee met regularly, the outcomes of which are summarised below: • Supervised the credit portfolio • Supervised the bank’s capital adequacy ratio • Supervised the automation of procedures • Supervised liquidity (performance of assets and debts commission) • Ad vised the board • Prepared risk management policies and guidelines
| Meetings of the Subordinate Workgroups on Credit Risk and Operational Risk The Subordinate Workgroups on Credit Risk and Operational Risk are specialist and executive entities created in 2017 to provide expert reports and improvement proposals to the Risk Committee. They are responsible for monitoring operational risk and credit risk management through risk detection, measurement, assessment, and control.
| Major Activities of the Risk Unit with regard to Risk Management The Risk Unit carries out numerous detection and measurement activities to facilitate risk assessment for the Risk Committee. In so doing, it follows the guidelines of the Central Bank of Iran and the recommendations of the Basel Committee for the management of credit, liquidity, operational, and market risks. The unit’s main activities are as follows: • Identifying different types of business-related risks, effective variables and items susceptible to different types of risks; • Designing and updating risk-evaluation models with the use of information and statistics, effective variables, and guidelines of the Basel Committee and the Central Bank of Iran; • Identifying, determining, and updating evaluation indicators for different types of risks (market risk, operational risk, liquidity risk, and credit risk); • Providing analytical reports on different types of risks (market risk, operational risk, liquidity risk, and credit risk); • Calculating the capital required to cover credit, market, and operational risks and preparing necessary reports; • Analysing credit concentration risks based on economic sector, geographical location, maturity, market Risk Analysis type, type of lending agreement, etc. in order to verify compliance with credit limits set internally and by the CBI;
Risk management is the process of identifying, assessing, and controlling potential risks related to the nature of • Preparing reports on entry and exit surveys, economic cost of money, age analysis of deposits, age banking activities. The purpose of risk management is to ensure reasonably the fulfilment of objectives based on analysis of receivables and loans, and currency market risk in order to determine currency risk, liquidity the bank’s approved strategies. In line with risk objectives, the department measures risk indexes and tolerance gap risk, and other types of risks; levels and defines the risk appetite as a major element in corporate governance and the bank’s strategy. • Forecasting liquidity surplus/shortfall on major currencies at different time intervals and reporting on the The key activities of ensuring effective risk management are as follows: foreign currency liquidity gap; • Updating and standardizing collateral-related information throughout the bank; | Risk Committee Meetings • Disclosing risk-management information based on the requirements of the Central Bank of Iran and as per clause 63 of the financial statements template of the CBI. The Risk Committee is a strategic body that reports to the Board of Directors. The outcomes of its findings are presented to the board in the form of supervisory and advice reports. The Risk Committee was established to comply with the internal control structure required by the Central Bank of Iran and to ensure that appropriate and | Capital adequacy sufficient managerial policies and procedures are in place to monitor and control various risks involved in banking operations. The Risk Committee supervises the enforcement of risk policies approved by the Committee and the In compliance with the Basel I Accord, and in order to protect depositors and ensure the integrity of the country’s board and places special emphasis on the protection and enhancement of the bank’s reputation, as well as on financial systems, the Central Bank of Iran requires that all banks operating under its regulations have a minimum attaining optimal capital adequacy ratio. capital adequacy ratio of 8%. Saman Bank’s Basel I capital adequacy ratio was calculated as 5% for 2017/18. The capital adequacy ratio will be calculated at 6% after the 2017/18 AGM and upon CBI’s approval of Saman’s core The most important measures undertaken by the Risk Committee during 2017/18 as follows: capital.
44 Annual Report 45 Saman Financial Group
|| Companies in Saman Financial Group ||
Net Profit (Loss) Net Profit (Loss) Capital Bank's Ownership (direct or indirect) in 2017/18 in 2016/17 IRR billion Percentage IRR billion IRR billion
Saman Exchange Co. 219 96.46 293 229
Hafez Saman Iranian Credit 24 99.00 19 42 Scoring Co.
Saman Satellite Co. 200 62.76 44 71
Major Accolades and Achievements of Saman Saman Processing Co. 100 100 31 14 Bank and Saman Financial Group in 2017/18
• Awarded the Commendation Letter from the 13th National Festival of Public Relations Publications; Saman Brokerage Co. 50 75 8 9 • Received an Appreciation Letter from CBI for performance in the interbank market; • Selected as the agent bank for National Development Fund of Iran; • Sponsored the 6th Banking and Business Forum, Iran-Europe; Tondar Noor Co. 2.7 99 0.2 1 • Actively participated in Iran Expo 2017; • Acted as the Lead Sponsor for The Euromoney Iran Conference 2018; • Progressed four steps to 20th place among the 100 superior companies of Iran; Saman Financial & Economic - 100 2 22 • Received three awards based on public voting in the fourth festival of ‘My Beloved Bank’; Development Group Co. • Became the first Iranian bank to sign a memorandum of cooperation with UNICEF; • Implemented the new version of a quality-management system in the Human Capital Department.
Adonis Co. 300 24.19 23 39
Kish Cell Pars Co. 1200 32 (77) (38)
46 Annual Report 47 Based on the approval dated 24 June 2017 by the Tehran Stock Exchange (TSE) Admission Board, Saman Electronic Payments Co. has been admitted to the TSE. Since 5 December 2017, Saman Electronic Payments Co. has been listed as the 520th company admitted to the TSE in the Computing Section, IT & Software Group, Industry Code 722008, symbol SEP. The profit forecast for 2018/19 is IRR billion 1,880, and the profit per share is identified as IRR 1,045. The company is evaluated at IRR billion 17,000, and the initial shares will be offered no later than the end of June
Plans and Projects for 2018/19 The major plans and projects for 2018/19 under the bank’s strategy are as follows:
Strategic Goals Level Strategic Measures
Debt collection campaign
Sale of surplus assets and unwanted Improving the balance sheet structure properties (concentrating on reducing the share of Debt collection nonprofitable assets) Improvement of risk management credit-scoring procedures
Launching an early warning system (EWS)
Financial Pricing Guide for Loan Products
Development of new products addressed at retail and SME customers to attract low-cost deposits Retail and SME
Achieving sustainable and profitable growth Making working customers (retail – corporate) loyal
Sectoral strategies, account planning and Corporate corporate banking sale models
Human Resources Performance management
Developing customer-centric organisational Implementing sale models (retail and SME), Retail and SME measures simplifying procedures and operations
Finacial Report
48 To Annual Ordinary General Meeting of Shareholders 7- The Bank’s foreign currency accounts as at balance sheet date have been translated by considering the foreign exchange rate movements in the beginning of the year 2019, which means that the method stated in Note 8- Saman Bank (Public Joint Stock Company) 10 to the financial statements is not complied with in practice. If necessary adjustment are made, net foreign currency assets and other income will reduce by Rls. 880 Billions Report on the Financial Statements 8- Presentation of statement of investment deposit performance and statement of changes in equity as Introduction fundamental financial statements, according to I.R.I. Central Bank’s directives, and also presentation of cash flow statement in three categories, have not been mentioned as mandatory by the accounting standards. 1- We have audited the consolidated financial statements of Saman Group & Bank (Public Joint Stock Company), including the balance sheets as at March 20, 2018 and statement of investment deposit performance, 9- Accounts receivables (Notes 15-2 and 14-2 to the financial statements) as at balance sheet date include statements of profit or loss, statements of comprehensive income, statements of changes in shareholders’ receivables from sale of properties (Behnad Bana Co & Taamin Atieh Karkonan Saman Co) and shares (Atieh equity as well as the cash flow statements for the fiscal year then ended together with the explanatory notes 1 to Andishan Sepehr Shargh Co) taken place in recent years. Since the receivables related to prior year’s sales have 65 hereto attached. not been received in accordance with the relevant payment terms and no documentations were provided to this firm regarding settlement of the obligations by these persons, who were somehow among related parties of the Responsibility of the board of directors for financial statements Bank, based on the contractual payment terms, no opinion can be expressed on their possible effects on the financial statements of the year under review nor the comparatives relating to prior years. 2- The board of directors of the Bank shall be responsible for preparing the financial statements according to accounting standards. Such responsibility includes design, implementation and maintenance of internal controls 10- Accounts receivables as at balance sheet date include an amount of Rls. 3,668 Billions consisting of balance for setting up these statements in such a manner to ensure that there is no significant misstatement due to receivable relating to sale of a property (Note 15-2 to financial statements), and transfer of other persons’ fraud or error. receivables to the group companies (Note 14-2 to financial statements), but despite actions taken, the final method of settlement is not clear and related documents and method of settlement of transferred debts were Responsibility of auditor and legal inspector not made available to this firm, hence no adjustments could be suggested for these items. 3- Our responsibility is to express an opinion on these financial statements based on our conducted audit in 11- As explained in Note 10-2-1 to the financial statements, dues form the Central Bank of Iran include an amount accordance with auditing standards. Those standards require that we comply with ethical requirements and of Rls. 7,095 Billions advance purchase of foreign currency during the years 2012 and 2013, which despite plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from actions taken, including special audits, the final settlement method of which is not clear yet. It should be noted material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts that, in connection to foreign exchange differences in the letters of credit opened during the above mentioned and disclosures in the financial statements. The procedures selected depends on the auditor’s judgment, years, an amount of Rls. 2,810 were received from customers, which have been reflected in including the assessment of the risks of material misstatement of financial statements, whether due to fraud or Note 22 of the financial statements as debts to banks and credit institutions. Additionally, according to the error. In making those risk assessments, internal control relevant to the company’s preparation of the financial Central Bank’s correspondence, an amount of Rls. 2,833 Billions were claimed as penalty for overnight statements in order to design audit procedures that are appropriate in circumstances, but not for the purpose withdrawals, for which no entry has been made in the accounts. Considering that no replies was received to our of expressing an opinion on the effectiveness of the company’s financial statements, is considered. An audit request for confirmation from the Central Bank of Iran, no information on the possible effects resulting from also includes evaluating the appropriateness of accounting policies used and reasonableness of accounting settlement of the mentioned accounts, including interest & other charges on inter-bank accounts, on the Bank’s estimates made by directors, as well as evaluating the presentation of the financial statements. financial statements under review nor comparative year is available. We believe that the audit evidence we have obtained is sufficient and appropriate to express a qualified 12- The title deeds for a part of immovable properties and a part of collateralized properties have not been opinion on the financial statements. transferred up to the date of this report. In addition, in relation to the method of utilizing the collateralized Our responsibility, as the legal inspector, is to report on non-compliance with legal requirements as properties in hand, resolving disputed properties, construction and completion costs and subsequent planning per the amended commercial code of Iran and the Bank’s articles of association and legal regulatory for sale of such properties, there is no information provided to this firm. Therefore, determining the possible requirements of banking activities to the ordinary general meeting of shareholders. effects of the above items on financial statements is not possible for this firm.
Basis of qualified opinion Qualified opinion 4- The situation of given financial facilities and dues from persons and the method of calculation of interest and 13- In our opinion, except for the effects of the items stated in Clauses 4 to 8 above and subject to possible effects related charges together with provisions envisaged in I.R.I. Central Bank’s circulars are explained in Notes 8-4, of items mentioned in Clauses 9 to 12, the financial position of Saman Group & the Bank (Public joint stock 8-6, 8-7 and 11 to the financial statements. company) as at March 20, 2018 and their financial performance and cash flows for the fiscal year then ended are true and fair, according to the accounting standards, from all material aspects. In this regards, in addition to the fact that the requirements of the manual on “Asset Classification in Credit Institutions and Calculation of Provisions for Doubtful Debts approved by Money and Credit Council” and related Emphasis of matters circulars on classification of receivables are not fully complied with, the overdue facilities have mainly been without any funds received and hence dealt with by rescheduling or renewing and reflected as current facilities (Our opinion has not been qualified as a result of items 14 to 17 below). and related interests shown in the accounts. Therefore, considering the control weaknesses in the system of As explained under Note 10-3-1 to the financial statements, although actions have been taken regarding calculating provisions for doubtful debts, including the revaluation of collateralized assets at different points in 14- collection of receivables from Bank Pasargad for the amount of Rls. 1,570 Billions, there has been no concrete time, it has not been possible for this firm to determine the required provisions. results. 5- The current investment in other shares and gains arising from increase in the value of these shares are 15- As per the tax claim notice, subject of Clauses (B) & (P) of Article 17 of the Act of Removing the Obstacles of reflected, respectively, in Notes 12 and 35-3 to the financial statements. Since the practice used by the Bank for Competitive Production (Note 26-2-1 to the financial statements), an amount of Rls. 781 Billions is claimed by reclassification and valuation of shares are not based on accounting standards, and considering the ownership the tax office, but the company has appealed against it, and the case is currently being reviewed by the board of percentage, applying the equity method of accounting would be necessary. The required adjustments would settlement of tax disputes. Also, for the year 2018, the Bank has not presented the information required by the increase the accumulated loss and decrease the investments in the consolidated balance sheet by the amount of mentioned Act. Rls. 4,172 Billions. 16- As explained in Note 21-2-3 to the financial statements, the collateralized assets do not appear to have been 6- Based on Note 26 to the financial statements, and since corporate income tax for the years 2006 to 2015 and adequately insured. The inventory is not adequately insured either (Note 17-1 to the financial statements). 2017 have been finalized, tax differences for these years, amounting to Rls. 1,264 Billions, should have been dealt with as the prior year adjustments. And, on the other hand, tax paid in advance of Rls. 914 Billions under the 17- The information about significant risks in the banking industry and explanation of the Bank’s status in terms heading of ‘other assets’ should be written off, tax payable of Rls. 350 Billions is to be reflected under the heading of structure, risk management methods & analysis, as elaborated in Note 59 to the financial statements, in of ‘provision for corporate income tax’. Additionally, considering the assessed tax for the year 2016 and the tax the absence of any specific standards, are presented only based on the Bank’s own interpretation regarding authority’s investigation, it seems necessary to make extra tax provision of Rls. 586 Billions as a minimum. calculation of such risks.
50 Annual Report 51 Other explanatory clauses Report on other information • Clause 1 of Article 7 regarding timely issue of audited annual financial statements of the Bank and the group consolidated accounts; 18- The responsibility regarding “other information” rests with Bank’s board of directors. “Other information” includes existing information in the management interpretation report. This firms’ opinion is not on “other • Clause 2 of Article 7 on submission of Board of Directors’ Report & Auditor’s Report on it within at information” and does not give any assurances on that. In relation to the audit of the financial statements, least 10 days before ordinary general meeting and maximum 4 months from the year end of the Bank; this firm’s responsibility is limited to just reviewing the “other information” in order to identify material Article 10 in relation to submission of minutes for ordinary & extraordinary meetings within discrepancies with the financial statements or other information gathered during audit or material • maximum of 10 days, to Companies Registrar; misstatements therein. If this firm identifies a material misstatement in “other information”, it must report such misstatement. In this regard, disclosures in Notes 4 to 12 affect “other information” and have not been • Clause 3 of Article 7 regarding submission of unaudited interim financial statements for amended in the above-mentioned report. “Other information” relates to the parent company.. 3, 6 and 9month periods within maximum 30 days from end of 3month periods; • Clause 4 of Article 7 regarding submission of 6monthly audited financial statements within Report on other legal responsibilities maximum 75 days of the end of the 6monthly financial period; • Article 9 regarding immediate disclosure of decisions made in general meetings; Report on other responsibilities of the legal inspector • Provisions of notification No. 440/021/B/96 dated July 15, 2017 requiring presentation of financial 19- The cases of non-compliance with some of the monetary and banking laws and regulations together with statements based on IFRS within maximum 6 months from publications of audited financial related circulars over the banking operations and mandatory bylaws for the banking system for the period statements; under review by our firm have been submitted to the Central Bank of Iran under a separate letter by this firm. 27- Internal controls related to the financial reporting of the Bank as at March 20, 2018 were assessed according 20- As explained in Note 59-7-3 to the financial statements, capital adequacy ratio is lower than the required value to the requirements of the Securities & Exchange Organization. Based on this assessment and considering by the CBI (8%), and the ratio will be even lower by considering the content of this report. Also, the method of the inherent limitations in internal controls, this firm has not observed any material weaknesses in internal calculating this ratio is not the same as that in the instructions dated July 8,2017. controls related to financial reporting, according to the second chapter of internal control instructions 21- Cases of of non-compliance with the legal requirements provided under the Amendment of the Commercial approved by SEO, with the exception of failure of the audit committee to perform its tasks in accordance with Code of Iran and articles of association of the Bank are as follows: the approved framework, failure to set up the software for some parts of the banking operations, such as letters of credit, and failure of the established mechanized system to report important elements of the banking Clause in the operations, e.g., loan collaterals. Article in the Amended Articles of Commercial Code Association 28- Regarding non-compliance with the Act of Removing the Obstacles of Competitive Production and Promoting Election of the members of the board of directors after termination of previous board 107 65 National Financial System in the financial year under review, the following matters should be reported: Completion of board of directors’ members in number 107 66 & 67 • Clause ‘P’ of Article 17 of the executive bylaw regarding preparation of the list of excess properties Presentation of financial statements within 3 months to auditor & legal inspector 0 105 and submission of this list to the Central Bank of Iran after auditor’s confirmation is not complied with, Distribution of 10% of net profits for the year 1395 (2017) 90 110 hence, it has not been possible to carry out compliance checks for Clauses “A” & “B” of Article 16; Payment of dividends within 4 months from approval date (previous year’s profits) 0 111 • Provisions of Article 3 of the executive bylaw, clause “B” item 1 of clause “T” of Article 17 in respect Holding annual general meeting within the period stipulated in the articles of of submission of list of foreclosed properties to the Central Bank of Iran for 3 months intervals; 89 & 138 31 association Provisions of Article 21 of the executive bylaw regarding opening of a special account if requested by Compliance with ownership ceiling of the Bank’s shares 0 7 • the receiver of the loan facilities; Compliance with capital adequacy ratio 0 115 & 116 • Provisions of Article 47 regarding agricultural loan facilities to the extent determined by the Central Bank of Iran; 22- Transactions mentioned under Note 61-3 to financial statements, including all the transactions subject of 29- In execution of Article 33 of ‘Executive Directive on Anti-Money Laundering for Auditors’, we have evaluated Article 129 of the Amendment of the Commercial Code of Iran performed during the fiscal year, reported to us the Bank’s compliance with the provisions of the mentioned law and other related circulars and executive by the board of directors, were reviewed by this firm. Such transactions are performed in compliance with the directives as per the required check-lists and auditing standards. In this respect, with the exception of provisions of the mentioned Article in terms of obtaining of the board's consent and absence of the director ‘risk-based classification of customers’ and ‘certain cases of non-compliance by subsidiaries’, no material concerned in voting. Considering the special circumstances of the related party transactions, our firm believes cases of non-conformity with the above laws and regulations has been detected. that such transactions should be brought to the annual general meeting of shareholders for proper decisions. 23- We have examined the report of the board about activities and general situation of the Bank, provided under Article 232 of the Amendment of the Commercial Code of Iran, to be presented to the general meeting of shareholders. In view of such examination and considering Notes 4 to 12, we can confirm that there is no significant case of inconsistency between the information therein and the documents provided by the board. Azmoon Pardaz Iran Mashhood Audit Firm 24- Detailed calculations relating to the difference between on account and final interest on investment deposits is (IACPAs) shown in the statement of investment deposit performance. In checking compliance with circular No. 126331 Abbas Vafadar M. Babaei Rahni dated March 9,2019 & letter No. 94/69383 dated July 11, 2015 of the Central Bank of Iran, we have seen no Date: 27th September 2018 cases of non-conformity. The excess interest payable to depositors amounts to Rls. 235 Billions. (800874) (871546)
Report on other legal and regulatory responsibilities of auditor 25- The annual membership fees for deposits guarantee fund, in line with the provisions for calculation and receipt of such membership fee based on the amended bylaws for such deposits (subject of circular number 68469.96 dated May 28, 2017 in relation to Directive number 22196/t53725 “H” dated 30th Ordibehesht 2018 of council of ministers) for the years up to and including 2017 were paid and for year 2018 were calculated, but not paid. 26- The provisions of the executive directive on disclosure of information in respect of listed companies in the Securities & Exchange Organization have not been complied in the following matters:
52 Annual Report 53 Saman Bank (Public Joint Stock Company) Consolidated Balance sheet For the fiscal year ended March 20, 2018
(restated) (restated) Note March 20, 2018 March 20, 2017 Liabilities and shareholders' equity Note March 20, 2018 March 20, 2017 Rls(m) Rls(m) Rls(m) Rls(m) Assets Liabilities Cash 9 36,593,485 31,701,765 Due to banks and other credit istitutions 22 9,221,821 10,032,775 Due from banks and other credit institutions 10 10,683,747 9,730,322 Customers' deposits 23 26,455,203 17,070,702 Due from the government 0 0 Dividends payable 24 26,316 62,283 Loans granted to and amounts due from governmental entities 0 0 Trade accounts payable 0 0 Loans granted to and amounts due from non-governmental entities 11 137,341,385 127,532,286 Advances received 25 58,454 7,847 Investments in shares and other securities 12 13,022,437 1,053,972 Debt securities 0 0 Long-term investments in affiliates 13 297,664 1,790,987 Provision for income tax 26 145,726 163,786 Due from subsidiaries and affiliates 14 458,720 75,921 Provisions and other liabilities 27 10,062,885 6,545,579 Other accounts recievable 15 41,599,727 25,401,199 Provisions for employees' termination and pension benefits 28 724,836 563,793 Orders and prepayments 16 63,828 30,447 Total liabilities before investment depositors' equity 46,695,241 34,446,765 Inventory (materials and goods) 17 255,543 305,222 Investment depositors' equity 29 253,176,148 213,714,033 Tangible fixed assets 18 3,668,807 4,142,138 Total liabilities 299,871,389 248,160,798 Intangible assets 19 2,181,127 4,296,212 Shareholders' equity Statutory deposits 20 27,478,565 23,035,684 Share capital 30 8,000,000 8,000,000 Other assets 21 35,668,279 28,543,129 Ongoing capital increase 0 0 Shares premium reserve 0 0 Parent company's shares held by subsidiaries (9) (9) Legal reserve 31 1,732,402 1,578,061 Other reserves 0 0 Assets revaluation reserve 32 614,971 1,507,148 Difference in foreign exchange rates 0 0 Retained earnings (1,072,741) (1,791,695) Treasury shares 0 0
Parent company total shareholders' equity 9,274,622 9,293,505 Minority interest 33 167,304 184,980
Total assets 309,313,315 257,639,283 Total liabilities and shareholders' equity 309,313,315 257,639,283 Customers' obligations for LCs 54-1 7,719,819 4,321,019 Bank's obligations for LCs 54-1 7,719,819 4,321,019 Customers' obligations for LGs issued 54-2 9,870,529 5,129,945 Bank's obligations for LGs issued 54-2 9,870,529 5,129,945 Customers' other obligations 54-3 28,847,484 20,301,828 Bank's other obligations 54-3 28,847,484 20,301,828 Managed funds and similar items 54-4 1,246,146 1,168,078 Managed funds and similar items 54-4 1,246,146 1,168,078
The accompanying explanatory notes are an integral part of these financial statements. The accompanying explanatory notes are an integral part of these financial statements.
54 Annual Report 55 ) ) Consolidated statement of profit & Loss For the fiscal year ended March 20, 2018 )
0 0 0 0 0 0 0 0 0 0 0 0 0 0
Total equity Rls(m) 85,769 88,373
787,526 892,177 892,177 (
( ( 9,274,622 9,381,876
(restated) 9,274,622
shareholders' shareholders' Note 2018 2017 Rls(m) Rls(m) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Income from loans granted and placements in other banks and debt securituies 34 19,571,823 24,219,009 Rls(m) shares Treasury Interest expenses on deposits 40 (33,754,445) (31,886,273) ) ) ) ) Net income from loan interests and placements in other banks (14,182,622) (7,667,264) ) ) 0 0 0 0 0 0 0 0 0 0 0 0 0 Fee and commission incomes 41 1,663,679 1,343,369 0
Rls(m) 85,769 88,373
787,526 918,401 154,341 154,341 (
earnings Retained
( ( ( 1,703,323
Fee and commission expenses 42 (1,911,331) (1,661,113) 1,072,741
( (
Net income from fees and commissions (247,652) (317,746) Income from sales and services rendered 43 90,626,150 57,931,415 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Cost of sales and services rendered 44 (90,040,028) (56,703,529) rates Rls(m) exchange in foreign Difference 586,121 1,227,886 ) Net profit (loss) from investments 35 7,415,095 2,232,732 ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Net profit (loss) from foreign currency exchanges and transactions 45 3,930,890 1,374,995 Rls(m) Assets 614,971 892,177 892,177 reserve 614,971
( ( 1,507,148
Other operating incomes 0 0 revaluation Total operating incomes (2,498,168) (3,149,396) Net other incomes and expenses 46 9,975,243 6,137,214 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Other Administrative and general expenses 47 (5,482,788) (3,882,074) Rls(m) reserves 2017 - 2018 Expenses for doubtful debts 48 (500,000) (304,240) Financial expenses 49 (8,301) (110,539) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Deprecciation/amortization expenses 50 (543,474) (473,881) Legal Rls(m) 154,341 154,341 reserve
1,578,061 1,578,061 1,732,402
Profit before calculating group share from incomes earned by affiliates 942,511 (1,782,916) Group share from incomes earned by affiliates 13 (19,197) 183,409 ) ) Profit (loss) before income tax 923,314 (1,599,506) ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 9 0 0 9 9
( ( (
Rls(m) Parent shares Income tax 26 (100,395) (266,255) held by company's subsidiaries Net profit (loss) 822,918 (1,865,761) Minority interest from net profit 35,393 48,872 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Earnings per share (EPS) (Rls.) 56 Rls(m) Shares reserve Basic earnings per share (Rls.) 98 (239) premium
Diluted earnings per share (Rls.) 98 (239) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Rls(m) capital Ongoing increase Consolidated Comprehensive statement of profit & Loss For the fiscal year ended March 20, 2018 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Rls(m) Capital 8,000,000 8,000,000 8,000,000
Year ended Year ended Note March 20, 2018 March 20, 2017 25 33 Rls(m) Rls(m) 51 Note Net Group Profit (Loss) 787,526 (1,914,635) Assets revaluation reserve 32 (892,177) 0 Difference in exchange rates for foreign transactions 0 1,506,473 Comprehensive income for fiscal year (104,652) (408,162) Prior years' adjustments 51 (88,373) (56,085) Consolidated adjustments 85,769 151,288
Comprehensive income recognized from reporting date of previous fiscal year (107,255) (312,959) Consolidated statement of changes in shareholders' equity For the fiscal year ended March 20, 2018 Increase in unregistered capital Capital increase Increase in registered capital Balance as at March 20, 2018 Total comprehensive incomes Total other comprehensive incomes Tax for other comprehensive incomes Approved dividend Difference in foreign exchange rates Dividend per share Other comprehensive incomes (losses) after tax deduction Assets revaluation reserve Other reserves Consolidated adjustments Distribution and allocation Legal reserve Prior years' adjustments Sale of shares Net profit Purchase of shares Balance as at March 21, 2017 Sale of treasury shares Purchase of treasury shares Parent company's shares held by subsidiaries Treasury shares The accompanying explanatory notes are an integral part of these financial statements.
56 Annual Report 57 )
) Consolidated statement of cash flows For the fiscal year ended March 20, 2018
0 0 0 0 0 0 0 0 0 0 0 0
Total 1,675 1,675 equity
Rls(m) 56,085 104,419 (
9,291,829 1,506,473 1,506,473 9,651,656 1,914,635 (restated) 9,293,505
(
shareholders' shareholders' Operating activities 2018 2017 Rls(m) Rls(m) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Cash received for Rls(m) shares
Treasury Interest and late payment penalty on loans granted 1,585,530 16,541,337 Interest on debt securities 31,304 203,304 ) ) ) ) ) ) Fees and commissions 1,640,633 1,343,368 0 0 0 0 0 0 0 0 0 0 0 0 0 Interest on deposits 1,422,354 1,649,990
Rls(m) 56,775 29,040 29,040 56,085
151,288 ( ( ( Profit from investments 7,841,881 2,411,446
earnings Retained
1,762,656 1,914,635 1,791,695 ( ( (
Other operating incomes 1,535,071 59,228,547 Other incomes 901,547 620,300 Cash payment for: 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
rates Interest on deposits (33,822,475) (31,886,273) Rls(m) exchange in foreign Difference Fees and commissions (1,951,868) (1,661,113) Other operating expenses (5,492,918) (60,753,908) Financial expenses (46,544) (111,316) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
675 Income tax (118,825) (678,608)
Rls(m) Assets reserve 1,507,148 1,506,473 1,506,473 1,507,148
Net cash (outflow) inflow from operating activities before changes in operating assets and liabilities (26,474,310) (13,092,926)
revaluation Cash flows from changes in operating assets and liabilities Net increase (decrease) in liabilities 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Due to banks and other credit institutions (743,280) (21,921,716)
Other Rls(m) Customers' deposits 9,137,191 (4,699,904) reserves 2016 - 2017 Debt securities 0 0 Operating portion of provisions and other liabilities 5,185,685 4,510,186 ) Investment depositors' equity 39,529,204 20,151,159 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Legal Net (increase) decrease in assets: 0 0 Rls(m) 29,040 29,040 46,869
reserve (
1,549,021 1,595,890 1,578,061
Due from banks and other cerdit institutions (1,008,603) 2,834,781 Principal amounts due from the government 0 0 ) ) Principal loans granted to and amounts due from governmental entities 0 0 ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 9
(
Principal loans granted to and amounts due from non-governmental entities 6,551,920 4,988,652 1,675 1,675 1,684 1,684
Rls(m) Parent shares ( ( held by
company's Investment in shares and other securities (12,704,094) (688,340) subsidiaries Due from subsidiaries and affiliates (125,909) (505,135) Other accounts receivable (16,372,287) (636,431) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Statutory reserve (4,442,881) (1,904,359)
Rls(m) Shares
reserve Operating portion of other assets 2,674,893 (10,804,309) premium Cash flows from changes in operating assets and liabilities 27,681,839 (8,675,416) Net cash inflow (outflow) from operating activities 1,207,528 (21,768,342) Investing activities 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Funds paid for acquisition of tangible fixed assets (858,851) (1,415,285) Rls(m) capital Ongoing increase Proceeds received from sale of tangible fixed assets 706,313 3,157,430 Funds paid for acquisition of intangible assets (467,295) (221,061) Proceeds received from sale of intangible assets 1,740,310 1,291,809 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Funds paid for acquisition of non-operating real estates 0 0 Rls(m) Capital 8,000,000 8,000,000 8,000,000 Proceeds received from sale of non-operating real-estates 0 0
Net cash (outflow) from investing activities 1,120,478 2,812,895 Net cash outflow before financing activities 2,328,005 (18,955,447) 25 33 51
Note Financing activities Cash from capital increase 0 0 Treasury shares transactions 0 0 Funds from shares premium 0 Financial facilities received 15,905,367 66,825,000 Repayment of principal financial facilities (15,591,641) (66,825,000) Dividends paid (165,666) (137,422) Net cash inflow (outflow) from financing activities 148,060 (137,422) Net cash increase (decrease) 2,476,065 (19,092,869) Cash at the beginning of the year 31,701,765 50,716,770 Effects of changes in forex exchange rates 2,415,655 77,864 Cash at year end 36,593,485 31,701,765 Non-cash transactions 18,374,645 13,545,707 Increase in unregistered capital Capital increase Increase in registered capital Total comprehensive incomes Balance as at March 20, 2017 Total other comprehensive incomes Tax for other comprehensive incomes Approved dividend Difference in foreign exchange rates Dividend per share Other comprehensive incomes (losses) after tax deduction Assets revaluation reserve Other reserves Consolidated adjustments Distribution and allocation Legal reserve Prior years' adjustments Sale of shares Net profit Purchase of shares Balance as at March 21, 2016 Sale of treasury shares Purchase of treasury shares Parent company's shares held by subsidiaries Treasury shares The accompanying explanatory notes are an integral part of these financial statements.
58 Annual Report 59 Saman Bank (Public Joint Stock Company) Balance sheet of the Parent Company For the fiscal year ended March 20, 2018
(restated) (restated) Note March 20, 2018 March 20, 2017 Liabilities and shareholders' equity Note March 20, 2018 March 20, 2017 Rls(m) Rls(m) Rls(m) Rls(m) Assets Liabilities Cash 9 36,749,077 31,494,714 Due to banks and other credit istitutions 22 9,014,314 9,757,594 Due from banks and other credit institutions 10 10,687,731 9,676,030 Customers' deposits 23 26,399,333 17,062,512 Due from government 0 0 Dividends payable 24 51,510 52,483 Loans granted to and amounts due from governmental entities 0 0 Debt securities 0 0 Loans granted to and amounts due from non-governmental entities 11 137,836,638 127,750,201 Provision for income tax 26 0 0 Investments in shares and other securities 12 13,435,948 2,777,794 Provisions and other liabilities 27 8,469,046 4,566,858 Due from subsidiaries and affiliates 14 2,928,844 2,802,935 Provisions for employees' termination and pension benefits 28 691,031 537,312 Other accounts receivable 15 40,359,781 23,863,436 Total liabilities before investment depositors' equity 44,625,234 31,976,759 Tangible fixed assets 18 2,972,625 3,613,037 Investment depositors' equity 29 254,382,253 214,853,050 Intangible assets 19 2,216,341 4,301,189 Total liabilities 299,007,487 246,829,809 Statutory deposit 20 27,478,565 23,035,684 Shareholders' equity Other assets 21 35,673,223 28,719,886 Share capital 30 8,000,000 8,000,000 Ongoing capital increase 0 0 Shares premium reserve 0 0 Legal reserve 31 1,689,324 1,536,569 Other reserves 0 0 Assets revaluation reserve 32 614,971 1,507,148 Difference in foreign exchange rates 0 0 Retained earnings 1,026,991 161,379 Treasury shares 0 0 Total shareholders' equity 11,331,286 11,205,096 Total assets 310,338,773 258,034,905 Total liabilities and shareholders' equity 310,338,773 258,034,905 Customers' obligations for LCs 54-1 7,719,819 4,321,019 Bank's obligations for LCs 54-1 7,719,819 4,321,019 Customers' obligations for LGs issued 54-2 9,870,529 5,129,945 Bank's obligations for LGs issued 54-2 9,870,529 5,129,945 Customers' other obligations 54-3 28,847,484 20,301,828 Bank's other obligations 54-3 28,847,484 20,301,828 Managed funds and similar items 54-4 1,246,146 1,168,078 Managed funds and similar items 54-4 1,246,146 1,168,078
60 Annual Report 61 Statement of the investment deposits performance of parent company For the Comprehensive statement of profit & Loss of the parent company For the fiscal fiscal year ended March 20, 2018 year ended March 20, 2018
Note 2018 2017 Year ended Year ended Note March 20, 2018 March 20, 2017 Rls(m) Rls(m) Rls(m) Rls(m) Profit sharing incomes Net profit (loss) 1,018,366 84,671 Income from loans granted 34 17,902,176 21,806,816 Assets revaluation reserve 32 (892,177) 1,506,473 Income from deposits and debt securities 34-2 1,073,525 1,581,737 Difference in exchange rates for foreign transactions 0 0 Net profit (loss) from investments 35 7,838,581 5,034,254 Comprehensive income for fiscal year 126,189 1,591,144 Total profit-sharing incomes 26,814,282 28,422,807 Prior years' adjustments 51 0 0 Bank's share from profit-sharing incomes 36-1 0 0 Comprehensive income recognized from the reporting date of previous fiscal year 126,189 1,591,144 Depositors' share from profit-sharing incomes before fees reduction 26,814,282 28,422,807 Deposits management fee 37 (3,931,454) (3,910,521) Depositors' share from profit-sharing incomes 22,882,828 24,512,286 Interest on statutory deposit/investment deposits 36-3 232,707 215,923 Compensation of expenses related to depositors' free resource surplus 38 10,028,495 6,801,975 to profit-sharing uses Final interest accrued on investment deposits 33,144,030 31,530,184 Provisional interest paid on investment deposits 39 (33,379,522) (31,547,400) Differential in interests payable (surplus of interest paid) to depositors (235,491) (17,216)
The accompanying explanatory notes are an integral part of these financial statements.
Statement of profit & Loss of the parent company For the fiscal year ended March 20, 2018 (restated) Note 2018 2017 Rls(m) Rls(m) Income from loans granted and placements in other banks and debt securities 34 19,579,880 24,254,202 Interest expenses on deposits 40 (33,822,476) (31,947,914) Net income from loan interests and deposits in other banks (14,242,596) (7,693,712) Fee and commission incomes 41 1,640,633 1,329,185 Fee and commission expenses 42 (1,951,868) (1,843,132) Net incomes from fees and commissions (311,235) (513,947) Net profit (loss) from investments 35 7,838,581 5,034,254 Net profit (loss) from foreign currency exchanges and transactions 45 3,949,737 1,384,566 Other operating incomes 0 0 Total operating incomes (2,765,513) (1,788,839) Net other incomes and expenses 46 9,955,091 6,206,558 Administrative and general expenses 47 (5,146,638) (3,586,052) Expenses for doubtful debts 48 (500,000) (300,000) Financial expenses 49 0 (1,787) Deprecciation/amortization expenses 50 (524,574) (445,209) Profit (loss) before income tax 1,018,367 84,671 Income tax 27 0 0 Net profit (loss) 1,018,367 84,671 Earnings per share (EPS) - (Rls.) 56
Basic earnings per share (Rls.) 127 11 Diluled earnings per share (Rls.) 127 11
The accompanying explanatory notes are an integral part of these financial statements. The accompanying explanatory notes are an integral part of these financial statements.
62 Annual Report 63 ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0
Total Total equity Rls(m) equity Rls(m) 84,671 126,189 892,177
( 1,018,366
1,591,144 1,506,473 9,613,952
11,331,286 11,205,097 11,331,286
11,205,096
11,205,096
shareholders' shareholders' shareholders' shareholders'
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Rls(m) shares Rls(m) shares Treasury Treasury ) ) ) ) 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
Rls(m) 152,755 161,379 152,755 Rls(m) 84,671 12,701 84,671 89,409 12,701
earnings Retained (
(
174,080
( 1,179,745 1,018,366 1,018,366 ( 161,379 1,026,991
earnings
Retained
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
rates Rls(m) rates Rls(m) exchange in foreign Difference exchange in foreign Difference
) ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0
675
Rls(m) Assets 614,971 892,177 892,177 reserve Rls(m) 614,971 Assets
( (
reserve 1,507,148
1,507,148 1,506,473 1,506,473 revaluation 1,507,148
revaluation 2017 - 2018 2016 - 2017 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Other Rls(m) Other Rls(m) reserves reserves 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0
0 0
0
0
0
0
0
0
0
0
Legal Rls(m) Legal 12,701 Rls(m) 152,755 12,701 152,755 reserve
reserve 1,536,569 1,536,569 1,689,324 1,523,868
1,523,868
1,536,569
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Rls(m) Shares Rls(m) reserve Shares reserve premium premium 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Rls(m) capital Rls(m) capital Ongoing increase Ongoing increase
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0
0
0
0
0
0
0
0
0
0
0
0
0
Rls(m) Capital Rls(m) Capital 8,000,000 8,000,000 8,000,000 8,000,000
8,000,000
8,000,000
Consolidated statement of changes in shareholders' equity For the fiscal year ended March 20, 2018 Approved dividend Dividend per share Other reserves Distribution and allocation Legal reserve Sale of treasury shares Treasury shares Purchase of treasury shares Increase in unregistered capital Capital increase Increase in registered capital Total comprehensive incomes Total other comprehensive incomes Tax for other comprehensive incomes Difference in foreign exchange rates Assets revaluation reserve Other comprehensive incomes (losses) after tax deduction Prior years' adjustments Net profit Balance as at March 21, 2017 Balance as at March 20, 2018 Approved dividend Dividend per share Other reserves Distribution and allocation Legal reserve Sale of treasury shares Treasury shares Purchase of treasury shares Increase in unregistered capital Capital increase Increase in registered capital Total comprehensive incomes Total other comprehensive incomes Tax for other comprehensive incomes Difference in foreign exchange rates Assets revaluation reserve Other comprehensive incomes (losses) after tax deduction Prior years' adjustments Net profit Balance as at March 21, 2016 Balance as at March 20, 2017
64 Annual Report 65 Statement of cash flows for the parent company For the fiscal year ended Explanatory notes to the financial statements For the fiscal year ended March 20, 2018 (restated) March 20, 2018 Operating activities 2018 2017 Rls(m) Rls(m) 1- Introduction of the Bank Cash received for Interest and late payment penalty on loans granted 1,585,530 16,590,759 1-1- Background Interest on debt securities 31,304 203,304 By virtue of the license No. H/1745 of July 24, 1999 granted by the Central Bank of I. R. of Iran, Saman Bank Fees and commissions 1,640,633 1,329,184 was registered with Tehran Department of Companies and Non-Commercial Entities Registration under No. Interest on deposits 1,324,689 1,631,067 154444 on September 1, 2009 and was listed with Tehran Stock Exchange/Iran Farabourse on November 16, Profit from investments 7,838,581 1,239,600 2011. Thus, the Bank has been put on the official list of prices which prevail on Tehran Stock Exchange/Iran Other operating incomes 1,535,072 1,288,354 Farabourse since June 6, 2012. The Bank is headquartered in Tehran, of No. 1543, Tarkeshdouz St., Parkway Other incomes 380,997 679,048 Intersection, Vali-asr Ave., Tehran, Iran. The Bank’s Economic Code is 4111-1166-8595. Cash payment for 0 0 Interest on deposits (33,822,475) (31,947,914) 1-2- Bank’s main activities Fees and commissions (1,951,868) (1,843,131) Other operating expenses (5,492,918) (3,763,373) The Bank has been licensed with the main objectives of performing authorized banking operations and activities Financial expenses 0 (1,787) (operations and transactions which are not prohibited for banks under the prevalent rules) under article 3 of the Articles of Association/Constitution and in accordance with the regulation No. 92/377538 of March 13, 2014 Income tax (4,460) (609,043) as approved by the Central Bank of I. R. of Iran. By extension, the bank’s main activities include: open various Net cash outflow from operating activities befor changes in operating assets and liabilities (26,934,916) (15,203,932) accounts such as savings accounts, free-interest deposit accounts, short-term or long-term investment Cash flows from changes in operating assets and liabilities deposit accounts; issue various banking credit cards or other authorized cards and other similar accounts; Net increase (decrease) in liabilities receive facilities and credit lines; grant loans in the form of applicable contracts and agreements; make fund Due to banks and other credit institutions (743,280) (17,284,616) transfers; conduct all transactions or foreign exchange transfers/money orders; open letters of credit and Customers' deposits 9,336,821 (4,822,566) carry out all related affairs; issue banking letters of guarantee and certificates of deposit; trade (buy and sell) Debt securities 0 0 participation bonds and other securities; conduct all operations related to purchase and sale of shares; safe Operating portion of provisions and other liabilities 3,902,189 298,204 custody services; carry out transactions in gold and silver; act as a broker or agent for participation bonds and Investment depositors' equity 39,529,204 20,679,254 for interbank operations and other credit institutions; provide insurance coverage for banking affairs; cash Net (increase) decrease in assets 0 0 management for customers; open branches and expand the banking network inside and ouside the country; to Due from banks and other cerdit institutions (1,011,701) 3,157,622 conduct and carry out all operations and activities in line with the objectives set and defined for the bank in the Principal amounts due from the government 0 0 context of the prevalent rules and regulations.. Principal loans granted to and amounts due from governmental entities 0 0 Principal loans granted to and amounts due from non-governmental entities 6,551,920 5,066,859 1-3- Number of Branches Investment in shares and other securities (10,658,156) 4,255,428 Due from subsidiaries and affiliates (125,909) (1,772,411) The number of branches during the year is listed below: Other accounts receivable (16,496,345) (18,211,769) Statutory reserve (4,442,881) (1,904,359) 2018 2017 Operating portion of other assets 2,625,214 7,022,717 Year end Average Year end Average Cash flows from changes in operating assets and liabilities 28,467,075 (3,515,637) Branches in Tehran province 83 83 84 84 Net cash inflow (outflow) from operating activities 1,532,159 (18,719,568) Branches in other provinces 51 51 51 53 Investing activities Branches in free zones 2 2 2 2 Funds paid for acquisition of tangible fixed assets (670,897) (597,696) Overseas branches 0 0 0 0 Proceeds received from sale of tangible fixed assets 704,742 401,372 136 136 137 139 Funds paid for acquisition of non-operating real estates 0 0 Proceeds received from sale of non-operating real-estates 0 0 Average means, the monthly average of the reporting period. Funds paid for acquisition of intangible assets (465,660) (47,271) Proceeds received from sale of intangible assets 1,740,325 1,104,053 Net cash (outflow) from investing activities 1,308,510 860,458 Net cash outflow before financing activities 2,840,669 (17,859,111) 1-4- Employment status Financing activities Cash from capital increase 0 0 The number of bank’s employees (headcount) during the fiscal year was as follows: Treasury shares transactions 0 0 Funds from shares premium 0 0 Group Parent Company Financial facilities received 7,500,000 66,825,000 2018 2017 2018 2017 Repayment of principal financial facilities (7,500,000) (66,825,000) Year end Year end Year end Average Year end Average Dividends paid (973) (104,552) Central headquarters and district head offices 1,595 1,757 785 783 784 754 Net cash inflow (outflow) from financing activities (973) (104,553) Branches in Tehran Province 1,025 1,008 1,025 1,014 1,008 1,026 Net cash increase (decrease) 2,839,696 (17,963,663) Branches in other provinces 577 581 577 575 581 598 Cash at the beginning of the year 31,494,714 49,362,167 Branches in free zones 32 33 32 32 33 33 Effects of changes in forex exchange rates 2,414,664 96,211 Overseas branches 0 0 0 0 Cash at year end 36,749,077 31,494,714 3,229 3,379 2,419 2,404 2,406 2,411 Non-cash transactions 18,374,645 13,545,707
The accompanying explanatory notes are an integral part of these financial statements. Average means, the monthly average of the reporting period.
66 Annual Report 67 2- Basis of preparing financial statements 8- Summary of significant accounting policies The existing financial statements have been prepared on the basis of accounting standards and in accordance with 8-1- Investments applicable rules and regulations of the Central Bank of I. R. Iran. The details of accounting standards including the changes made during the year have been defined in notes 5 and 6. 8-1-1- Method of valuation Long-term investments are valuated at cost price upon deduction of any accumulated loss in each item of 3- Basis of consolidation investment and the current quickly marketable investments are valuated at market price and other current investments are valuated at net sales value of each item of investment. 3-1- The bank consolidated financial statements aggregate the assets and liabilities of the bank and of the subsidiaries qualifying for consolidation upon elimination of inter-group transactions and balances as 8-1-2- Method of income recognition well as the unrealized profit and loss from intergroup transactions. The incomes earned from investments in subsidiary and affiliated companies are recognized at the time 3-2- As to the acquisition of subsidiaries during the given period, the results of their operations are of approving dividends by the investee company shareholders’ general meeting (until the approval date of consolidated as of the date they are effectively controlled by the bank. As regards the subsidiaries financial statements) and the incomes earned from other long-term and current investments are recognized transferred to the bank, the results of their operations are consolidated until the date of their at the time of approving dividends by the investee company’s shareholders’ general meeting (until the possession. balance sheet date). 3-3- The bank shares acquired by the subsidiaries are recorded at cost price in their accounts. Such shares 8-2- Tangible Fixed Assets are entered in accounts and reflected in the consolidated balance sheet as a declining element of the shareholders’ equity and reflected in the financial statements under the heading of “parent company’s 8-2-1- Except for land and buildings, the tangible fixed assets are recorded in accounts on the basis of cost. shares held by subsidiaries”. The expenditures incurred for renovation and major repairs that will substantially increase the capacity or the useful life of fixed assets or will fundamentally improve the output quality are regarded as capital expenditures 3-4- The fiscal year of subsidiaries ends on December 21 of each year and their operations are consolidated and will be depreciated/amortized over the remaining useful life of related assets. The expenditures incurred in the same manner. Nonetheless, in the case any event occurs up to the reporting date of the bank’s for minor repairs and maintenance out of the assets initial valuated performance standards for the purpose of financial statements which might substantially affect the consolidated financial statements in their protection or recovery of the expected economic benefits of commercial unit are regarded as current expenses entirety, the effects thereto will be reflected in accounts by making the required adjustments in the items at the time of occurrence and recorded in the profit and loss account of the given period. of the financial statements of subsidiaries. 8-2-2- Depreciations of tangible fixed assets are calculated and recorded in accounts under the provisions of the 3-5- Atieh Alborz Company was not consolidated in the financial statements of the fiscal year ending March Depreciation Rules under article 151 of Direct Taxation Law and on the basis of the following rates and methods. 20, 2017 and March 20, 2018, due to its lack of operations or a future plan to be either transferred or dissolved. The adjustments so required have been made in the financial statements. 8-2-3- For the fixed assets acquired and used during the month, depreciation will be calculated at the time of purchase and recorded in accounts. When each item of depreciable assets, upon availability for operation 3-6- Upon the launch of Atieh Andishan Sepehr Shargh Company business activities during the fiscal year is not utilized for sometime on the grounds of work stoppage or shut-down, the rate of depreciation for such ending March 20, 2017, this company’s operations were also reflected in the bank’s consolidated period will be equivalent to 30% of the rate which has been reflected in the above-mentioned table: financial statements. Type of asset Depreciation rate Depreciation method 4- Operating and reporting currency unit Buildings and installations 7 &12% Declining line Furniture, fixtures, computer hardware and devices 3, 5 & 10 years Straight line The items in the financial statements have been measured by using Rial as the currency unit in the main economic Royalty on operating license 10 years Straight line environment where Saman Bank has been operating. Such items have been presented in Iranian million rials Motor vehicles 25 & 35% Declining line (shortened to Rls. M.) for better understanding and comprehension unless otherwise expressly stated in financial POS terminals 5 years Straight line statements and/or in the relevant explanatory notes. ATM machines 10 years Straight line Technical equipment, satelite and hub 4 &10 years and 20% Straight and declining line 5- Using judgment and estimates Costs for branch improvement and refurbishments 3 years Straight line In preparing the present financial statements, the Bank management have used, made and adopted judgments, Tools 1 & 4 years Straight line estimates, and assumptions in determining the amounts recognized in the financial statements. Arguably, the Equipment and fixtures in rented buildings 2 years Straight line actual results may vary from such estimates. However, the estimates and assumptions are based on historical records and the management board will continuously review them by comparing with actual events. 5-1- In preparing the bank financial statements, no particular judgment and estimate have been used. 8-3- Intangible assets 8-3-1- Intangible assets except for goodwill of business place are entered in accounts at cost. The goodwill 6- Basis for measurement of business place will not be depreciated. However, upon a value impairment test at the end of each financial year, the required provision will be calculated if it is deemed necessary. Computer software packages used Except for the material cases, the financial statements have been prepared on the basis of the historical cost price. for operational and administrative purposes are depreciated on a straight line basis over 3 years. For other However, for certain fixed assets including land, buildings thereon, and goodwill, the basis of revaluation method intangible assets no depreciation/amortization is computed. adopted by independent experts or appraisers has been applied. 8-4- Recognizing incomes from the loan facilities granted, fees and late 7- Change in accounting procedures payment penalties The bank has used and presented in its financial statements the accounting policies and methods set forth in note On the strength of the resolution adopted by the Money and Credit Council at its 1044 session of July 16, 2005 8 by maintaining stability in procedures for all periods so reported. which was notified under the directive No. 772/MB of July 18, 2005 by the Central Bank of Iran (CBI), the income earned from the loans granted should be recognized on the basis of accrual system. Accordingly, by virtue of the directive No. 94/258020 of November 30, 2015 no accrual income has been recognized for the category of doubtful debts. Thus on the basis of the accrual system, the method of recognizing the bank’s incomes is described as follows:
68 Annual Report 69 Income and late penalties on loans granted and fees Method of recognition 3- The loans with the passage of 5 years or more of their maturity for repayment of the principal amounts Interest on loans granted and interests thereto are required to have 100% specific provision (without considering the value of collaterals). Current Accrual / Cash Overdue Accrual / Cash The management has not passed any judgment on the financial statements beyond the context of the Outstanding Accrual / Cash foregoing directive. Doubtful Accrual / Cash 8-8- Provision for employees’ termination benefits Late payment penalties Current Accrual / Cash The employees’ termination benefits are calculated and entered in accounts on the basis of the last month’s Overdue Accrual / Cash fixed salary and regular benefits for each year of their service records. Outstanding Accrual / Cash 8-9- Provision for employees’ pension benefits Doubtful Cash Commission Fees The bank’s employees are under the social security coverage and thus no provision for their retirement pension has been entered in accounts. Commission fees from LGs issued Cash Commission fees from other banking services Cash 8-10- Foreign currency translation Commission fees from loans granted on interest-free accounts Accrual / Cash 8-10-1- Country-wide domestic accounts Monetary items in foreign currency are translated at the official exchange rate (as announced by the Central 8-5- Basis for calculating depositors’ share from profit-sharing incomes Bank of Iran (CBI)) at the balance sheet date and non-monetary items recorded in foreign currency at historical cost are translated at the official rate prevailing on the date the transaction is conducted. The In applying the provisions of the Usury-Free Banking Law ratified on August 30, 1983 and the executive differences arising out of settlement or translation of foreign currency monetary items are recognized as regulations and by-laws thereto and in view of the directive No. 94/69643 of June 10, 2015 issued by the Central income or expense for the given period and then entered in the profit and loss statement. Bank of Iran (CBI), the profit-sharing income, uses of shared resources and depositors’ share from the profit-sharing income should be calculated and the results thereof should be reported in the statement of investment deposits performance. 8-10-2- Offshore banking transactions accounts The assets and liabilities of overseas branches are translated at foreign exchange rate at the balance 8-6- Classification of loans granted (loan portfolios) sheet date and the incomes and related expenses are translated at the foreign exchange rate prevailing on the transaction date. All differences resulting from such translations are recognized in the statement of Pursuant to the Directive for Classification of Assets Owned by Credit Institutions adopted by the Money and comprehensive profit and loss and are classified under the heading of shareholders’ equity in the balance Credit Council (subject of the directive No. MB/2823 of February 25, 2007 issued by the Central Bank of Iran sheet. Additionally, the differences in translation of monetary items which inherently form a portion of net (CBI)) and with regard to time factors and delay in payments as described below, the customers’ financial investment in offshore banking transactions are recognized in the statement of comprehensive profit and situation and status of related industry, the loan facilities granted by the bank shall be evaluated and classified loss and classified and titled under shareholders’ equity in the balance sheet until the time investment is into one of the following four categories: transferred. 1- Current category (maximum up to 2 months as of the maturity date and/or the date of payment interruption). 8-11- Goodwill 2- Overdue category (2 to 6 months as of the maturity date and/or the date of payment interruption) The accounting policy for acquisition of units will take place on the basis of purchase method. The surplus cost of acquiring investment in subsidiaries qualified for consolidation and in affiliated companies qualified 3- Outstanding category ( 6 to 18 months as of the maturity date and/or the date of payment interruption) for net worth method for group shares is recognized as goodwill out of the fair net value of their recognizable 4- Doubtful category (over 18 months as of the maturity date and/or the date of payment interruption) assets at the time of acquisition and will be amortized over 10 years. The goodwill derived from acquisition of affiliates will be recorded in the consolidated balance sheet as part of the book value for long-term investments The management has not passed any judgment on the financial statements beyond the context of the aforesaid in the affiliated companies. directive. 8-7- Provision for doubtful debts 8-12- Treasury shares Under the provision of the Law Governing the Removal of Competitive Production Barriers and Enhancement Pursuant to the regulations governing the procedures for calculation of provisions for credit Institutions as of Financial System and on the strength of the executive regulations adopted by the Securities and Exchange approved by the Money and Credit Council (subject of the directive No. 91/21270 of April 20, 2012 issued by Organization High Council, the bank shall be allowed to acquire 10 percent of its own shares. The treasury the Central Bank of Iran (CBI)), provisions for the loan facilities granted are to be calculated and entered in shares are to be reported on the basis of cost price on the acquisition date. Any type of differential resulting accounts as follows: from purchase and sale of treasury shares is reflected in the shareholders’ equity section. 1- General provision which is equivalent to one and half (1.5%) percent of the total loans balance will be calculated at the end of each year except for the balance of the loans for which specific provision has been 8-13- “Other items” in the notes to financial statements calculated. Considering the number of items used for certain accounts, some items in every note have been reported under 2- Specific provision relative to the balances of overdue, outstanding and doubtful accounts will be calculated the heading of “Other”. The items which are entered in accounts under the title of “other” include insignificant as described below after deduction of the updated value of collaterals in each loan category by exercising the or less important items in terms of content and may be up to 10% of the total amount which come under such predetermined rates: note. Notably, the number of items under this heading has also been disclosed.
Loan category Multiple Percentage Overdue loans 10 Outstanding loans 20 Doubtful loans (based on the evaluation of the customer’s repayment capability) 50-100
70 Annual Report 71 9- Cash 10- Due from banks and credit institutions
Group Parent Company Group Parent Company Note 2018 2017 2018 2017 Note 2018 2017 2018 2017 Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Cash in hand (Rial) 1,765,896 1,586,336 1,765,004 1,586,147 Due from CBI 10-2 7,471,674 5,527,665 7,471,674 5,473,373 Cash in hand (Forex) 9-2 1,267ٌ,105 1,102,117 1,181,210 1,080,935 Due from other banks and credit institutions 10-3 3,212,073 4,202,657 3,216,058 4,202,657 Foreign currencies placed with brokers 786,982 382,739 0 0 10,683,747 9,730,322 10,687,731 9,676,030 Cash in transit (Rial) 200 1,200 200 1,199 Cash in transit (Forex) 0 0 0 0
Demand deposits placed with CBI 9-3 3,886,991 4,171,648 3,886,991 4,171,648 (unrestricted) 10-1- The placements in other banks which do not have restrictions on their withdrawal have been classified under the heading of “cash”. Placements in other banks and 9-4 28,886,311 24,457,725 29,915,672 24,654,785 credit institutions (unrestricted) 10-2- Due from the Central Bank of Iran (CBI) 36,593,485 31,701,765 36,749,077 31,494,714 Group Parent Company Note 2018 2017 2018 2017 9-1- The cash amounts in rials and foreign currencies placed with the Saman bank branches up to the limit of Rls(m) Rls(m) Rls(m) Rls(m) Rls. 3, 506, 037/- million have been put under sufficient insurance coverage against possible accidents Demand deposits with CBI - (rial) (restricted) 0 0 0 0 and risks arising from theft and fire. Demand deposits with CBI - (forex) (restricted) 0 0 0 0 9-2- The cash foreign currencies owned by the parent company include: 22,479,210.47 USD, 6,699,694.06 Demand deposits with Central Banks of 0 0 0 0 Euros, 75,268.83 UK Pounds, 1,962,203.50 Dirhams and 2,615/- Turkish Liras. other countries (restricted) Interest receivable on statutory deposit 0 0 0 0 9-3- The demand deposits placed with the Central Bank of Iran (CBI) Other amounts due (3 items) 10-2-1 7,471,674 5,527,665 7,471,674 5,473,373 (unrestricted) 7,471,674 5,527,665 7,471,674 5,473,373 March 20, 2018 March 20, 2017 Rls(m) Rls(m) Demand deposits with CBI (Rial) (unrestricted) 3,743,588 4,171,303 10-2-1- The balance of this account amounting to Rls. 7,094, 694/ million is related to the forward purchase Demand deposits with CBI (Forex) (unrestricted) 143,403 345 of forex from the Central Bank of Iran (CBI) for letters of credit under the directive No. M 60/1015 of December 7, 2013 issued by the CBI and breaks down as follows: Demand deposits with Central Banks of other countries (unrestricted) 0 0
3,886,991 4,171,648 2018 Preferential exchange rate Official exchange rate Total
Currency Forex Amount in Forex Amount in Forex Amount in Forex amount Forex amount Forex amount 9-4- The placements in other banks and credit institutions (unrestricted) type rate Rials rate Rials rate Rials Rls(m) Rls(m) Rls(m)
Group Parent Company Euro 62,716,454.42 46,249 2,900,573 37,188,557.46 46,249 1,719,934 99,905,011.88 46,249 4,620,507 2018 2017 2018 2017 UAE Dirham 34,270,705.10 10,263 351,720 2,563,672.39 10,263 26,311 36,834,377.49 10,263 378,031 Chinese Yuan 0 5,943 0 24,142,410.16 5,943 143,477 24,142,410.16 5,943 143,479 Rls(m) Rls(m) Rls(m) Rls(m) Demand deposits with other local banks and credit institutions S. Korean Won 52,416,788,566 35 1,844,232 3,060,739,620.99 35 107,689 55,477,528,186.99 35 1,951,921 190,730 114,367 133,689 62,108 (Rial) (unrestricted) Turkish Lira 78,719.68 9,609 756 0 9,609 0 78,719.68 9,609 756 Term deposits with other local banks and credit institutions 2,767,739 5,973,921 2,568,075 6,390,729 5,097,281 1,997,411 7,094,694 (Rial) (unrestricted) Demand deposits with foreign banks (Forex) (unrestricted) 24,696,726 15,689,210 24,948,396 15,689,210 Term deposits with other local banks and credit institutions 0 29,760 0 29,760 It is further added that owing to the follow-up actions by the bank management and until the issuance date of (Forex) (unrestricted) the financial statements, an agreement was reached between the representatives of the CBI’s Office of Statistics Term deposits with foreign banks (Forex) (unrestricted) 920,705 1,068,954 844,099 901,465 and Forex Obligations and representatives of Saman Bank to the effect that the Central Bank of Iran (CBI) agreed Demand deposits with other local banks and credit institutions (Forex) 310,411 1,581,513 1,421,413 1,581,513 to provide the amount of $ 363 million as listed below. Accordingly, on the strength of the letter No. 256646 of (unrestricted) December 16, 2014, the Central Bank has made the settlement of forex debts due subject to the performance of 28,886,311 24,457,725 29,915,672 24,654,785 a special audit of foreign currency by an independent auditor for the years 2012 and 2013. In pursuance of this demand, Sokhane-hagh Auditting Services and Institute performed an audit as requested by Central Bank of Iran (CBI) and then Saman Bank submitted the completed audit report containing the detailed list of the assets and liabilities as well as the forex resources used to cover the years 2012 and 2013 to the Central Bank of Iran (CBI) 9-5- The placements in other banks which have restrictions on their withdrawal (in terms of time and other Deputy for Foreign Exchange Affairs under the letters No. 95.31969 of March 18, 2017 and No. 95.31972 of restrictions) have been classified under the heading of “Due from banks”. March 18, 2017.
72 Annual Report 73 Amounts in dollar 10-3-1- Other amounts related to the claims from Saderat Bank and Passargad Bank break down Amount requested by Data entered by Saman bank on website of as follows: Exchange rate Saman bank Statistics Information Department Post-control under letter obligations Balance of facilities no. 013678/M/92/210 Total registered Due from CBI of February 2014 ,25 amount 2018 2017 Interest Type of Type Type of Forex Reference exchange rate (subsidized) 462,679,859 750,600,608 563,176,118 301,954,123 Name of bank rate Maturity Rls(m) Rls(m) currency of contract collateral amount Official exchange rate 140,214,008 170,080,338 150,154,772 43,187,252 (Percentage) Amounts in rial Free market rate 0 0 0 18,100,244 Factoring Exchange rate for opening LCs 0 955,547 461,132 0 Saderat Rial 21 April 23, 2011 LC documents 0 275,317 275,317 (discount) 602,893,867 921,636,493 713,792,022 363,241,619 Factoring Saderat Rial 21 April 27, 2011 LC documents 0 0 260,009 (discount) Factoring Saderat Rial 21 August 1, 2011 LC documents 0 300,300 300,300 10-2-2- The amount of Rls. 376,980/- million from the said account balance is mainly related to the term (discount) Factoring foreign currency deposits placed with the Central Bank of Iran (CBI). Saderat Rial 21 June 28, 2011 LC documents 0 261,215 261,215 (discount) Factoring 10-3- Due from other banks and credit institutions Saderat Rial 21 June 28, 2011 LC documents 0 0 260,000 (discount) Group Parent Company Factoring Saderat Rial 21 April 25, 2011 LC documents 0 50,370 50,370 Note 2018 2017 2018 2017 (discount) Factoring Rls(m) Rls(m) Rls(m) Rls(m) Saderat Rial 21 May 24, 2011 LC documents 0 0 320,577 (discount) Demand deposits with other local banks and 0 0 0 0 Factoring credit institutions (Rial) (restricted) Saderat Rial 21 May 10, 2011 LC documents 0 240,388 240,388 (discount) Demand deposits with other local banks and 0 0 0 0 Factoring credit institutions (Forex) (restricted) Saderat Rial 21 May 10, 2011 LC documents 0 0 240,463 (discount) Term deposits with other local banks and credit 0 0 0 0 Factoring institutions (Rial) (restricted) Saderat Rial 21 May 4, 2011 LC documents 0 260,971 260,971 (discount) Term deposits with other local banks and 0 0 0 0 Factoring credit institutions (Forex) (restricted) Saderat Rial 21 April 28, 2011 LC documents 0 0 239,991 (discount) Demand deposits with foreign banks (Forex) 0 0 0 0 Factoring (restricted) Saderat Rial 21 March 9, 2011 LC documents 0 242,400 242,400 (discount) Term deposits with foreign banks (Forex) 0 0 0 0 Factoring (restricted) Saderat Rial 21 April 23, 2011 LC documents 0 274,709 274,709 (discount) Facilities granted to other banks and credit 0 0 0 0 institutions 1,905,669 3,226,709 Payment of checks issued by other banks 68,462 43,095 72,446 43,095 Amounts in forex Factoring Other amounts due (2 items) 10-3-1 3,143,611 4,159,562 3,143,611 4,159,562 Pasargad Euro 12.81 October 5, 2012 LC documents 15,766,893 729,203 549,492 (discount) 3,212,073 4,202,657 3,216,058 4,202,657 Factoring Pasargad Euro 12.81 September 29, 2012 LC documents 5,000,000 231,245 174,255 (discount) Factoring Pasargad Euro 12.81 October 3, 2012 LC documents 6,000,000 277,494 209,106 (discount) 1,237,942 932,853 3,143,611 4,159,562
Saderat Bank In line with the policy of expanding banking services aimed at providing finance for its customers in the areas of rials and foreign currencies, mitigating the credit portfolio risks and maintaining the capital adequacy ratio, Saman Bank included in its loan portfolio services the discount of the term letters of credit which other banks opened and guaranteed their payments on due dates as of March 2011 (ending the Iranian calendar year). In the area of foreign currencies, discounts were made without recourse to the beneficiary by paying the amounts so discounted into the beneficiary’s account (the discount applicant) in compliance with the appropriate rules and standards and within the context of the regulations governing the forex letters of credit and uniform rules concerning the letters of credit. In the area of rials, Saman Bank discounted the locally-issued term letters of credit (in rials) opened by the Iranian banks within the framework of the rules governing the local letters of credit (in rials) and applicable standards adopted by the Central Bank of Iran(CBI) (uniform rules concerning the letters of credit) without recourse as of 2010 and early periods of 2011 and paid the amounts so discounted
74 Annual Report 75 into the beneficiary’s account (the discount applicant) in compliance with the appropriate rules and regulations. Original Late payment Processing cost LC number Balance due Debt status The discounts so described were performed along with the exercise of all necessary controls following the amount sought penalty and lawyer's fees exchange of instruments in the letters of credit and after receipt of required confirmations (encoded Faxes from 89/3446/0029 259,922 correspondent banks) regarding the authenticity of opened letters of credit as well as irrevocable commitments 89/3446/0030 259,915 by the opening banks for payment of the proceeds derived from such discounts to Saman Bank on due dates 402,914 24,222 0 Settled and in return for transfer of the beneficiary’s rights (discount applicant). 90/3446/0023 143,595 90/3446/0024 143,583 As such, a number of companies made applications for discount of the letters of credit opened and guaranteed 89/3446/0063 257,600 203,654 9,425 0 Settled by other banks which were processed in compliance with the foregoing standards and upon receipt of 90/3446/0010 249,681 262,450 7,491 0 Settled authorization from the bank’s credit committees. For the discount of forex-denominated letters of credit, all credit items were paid and settled on maturity dates by the banks which had opened and guaranteed such 90/3446/0021 260,009 314,847 26,609 0 Settled instruments. For the discounts of rial-denominated term letters of credit all items with the exception of a 90/3446/0022 239,991 314,776 26,668 0 Settled number of items connected with Amir Mansour Arya Group, were paid and settled by the opening banks in a 90/3446/0027 240,463 291,170 24,632 0 Settled normal way of business practices. For the discounting facilities provided for the companies affiliated to Amir 90/3446/0038 260,000 0 0 0 Settled Mansour Arya Group or for the companies which were trading partners of this Group, except for two banks, 90/3446/0031 320,577 0 0 0 Settled Bank Saderat and Bank of Industry and Mine, all other banks including Pasargad Bank, Sepah Bank, Bank Melli Amounts credited and in the process 90/3446/0016 274,709 0 0 274,709 and Bank Maskan fulfilled their obligations and paid Saman Bank the committed amounts under 18 letters of of settlement credit totaling Rls. 2,136 billion on the due dates. Only the two banks of of Saderat and Industry and Mine failed 90/3446/0015 275,317 0 0 275,317 to honor their obligations pledged against Saman Bank. The total discounts made and the amounts guaranteed 90/3446/0017 300,300 0 0 300,300 to be paid in the letters of guarantee by these two opening banks on the maturity dates were as follows: 90/3446/0037 261,215 0 0 261,215 Judgement against Bank Saderat 90/3446/0028 240,388 0 0 240,388 Balance of 90/3446/0019 260,971 0 0 260,971 Company name Customer LC opening bank Company's ownership (first beneficiary) discounting (Obligor to pay documents traded no. (% held) 90/3446/0018 50,370 0 0 50,370 Judgement against Bank Saderat applicant/transferor of proceeds funds on maturity) (in billion rials) 89/3446/0072 242,400 0 0 242,400 Pending Elit Co.- Anzali Free 4,541,006 1,789,812 119,048 1,905,670 - 1305959 Saderat 761 Amir Reza Moujoudi (99%) Trade Zone
Staff cooperative Co. of National Iranian Fouladyar Iranian Industrialand Steel Group (55% of shares) 174667 Saderat 300 Concerning the 11 letters of credit under numbers 90/3446/0015 and 90/3446/0018 and 90/3446/0017 and Trading-Industerial Co. Iran Metal Wastes Procurement 90/3446/00137 and 90/3446/0028 and 90/3446/0021 and 90/3446/0031 and 90/3446/0027 and 90/3446/0038 and and Processing Co. (40% of shares) 90/3446/0019 and 90/3446/0022 totalling the amount of Rls. 2,729,396,7832,000/-. The verdicts passed by the Foulad Iran Public 7778609 Saderat 521 Foulad Staff Pension Fund(99.7%) Bench 14 of Tehran Public Civil Court were against Bank Saderat. Following the appeal lodged by Bank Saderat, Service Co. the verdicts of initial court in connection with 5 letters of credit under numbers 90/3446/0031 and 90/3446/0027 IMIDRO (50.5%) & Provincial Investment and 90/3446/0038 and 90/3446/0022 and 90/3446/0021 received finality in the Bench 18 of Tehran Provincial Khuzestan Steel Co. 13934 Saderat 807 Companies(30%) Court of Appeal (Revision). The final verdicts were referred to the initial court for issuance of the execution Saderat 1,350 writ for enforcement of final judgments. The execution writ was issued and served on Bank Saderat. Despite Foulad Spadana Co. 1124386 Amir Reza Taremi (95%) the service of the writ, Bank Saderat did not take any action to enforce the judgment and thus an executory file Industry & Mine 499 was formed against Bank Saderat and enforcement actions were taken for the foregoing 5 letters of credit as Parsian Milad Hadid Co. 1124386 Saderat 802 Mohsen Karimian (60%) deemed appropriate. As result, a total amount of Rls. 3,102,282,496,723/- was collected and credited to Saman 5,040 Bank account and the case for the said five letters of credit was closed. As regards the letters of credit number Amounts collected by 90/3446/0018, since the Saderat Bank has made the second appeal (appeal to the Supreme Court), the file was (3,134) March 20, 2018 referred to chamber 22 of the Supreme Court upon exchange of submissions and the case is now pending. Cash collected during 2018 (275) As regards the letter of credit number 90/3446/0016 which was investigated by the Bench 19 of Tehran Public Final court decree against Bank Civil Court, despite submission of the case for the expert advice and issuance of the expert opinion in favor of (1,388) Saderat Saman Bank, initially the judgment was dismissed. Nevertheless, Bank Saman lodged an appeal for revision Debt balance 243 whereby the Bench No. 18 of Tehran Provincial Court of Appeal (Revision) reversed the initial decision and sent the file back to the initial court for rehearing. However, this time, the Bench No. 19 dismissed the case brought by Saman Bank whereby upon the second revision, the Bench No. 18 of Tehran Provincial Court of Appeal, while overturning the decision made by the initial court, passed judgment against Bank Saderat and in favor In order to protect the interests and rights of Saman Bank and seek compensation from the guaranteed of Saman Bank. Upon the request made by Saman Bank for enforcement actions, so far the amount of Rls. amounts and force the two banks of Saderat and Industry and Mine to fulfill their obligations, Saman Bank 711,970,466,631/- for the original remedy sought and loss has been collected and credited to the Saman Bank has taken legal actions versus these two banks by claiming the collection of proceeds derived from 8 matured account and the residual amount due is in the process of recovery. As regards the letters of credit number letters of credit whereby 6 letters of credit are related to Bank Saderat and 2 letters of credit are related to 90/3446/0015, 90/3446/0017, 90/3446/0019, 90/3446/0037 and 90/3446/0028 the case was reheard by the Court Bank of Industry and Mine. For all of the 8 letters of credit, Saman Bank submitted a statement of claim to the of Appeal (Bench No. 12 of Tehran Provincial Court of Appeal) and final verdicts were passed in favor of Saman trial court and requested attachment of the assets and property owned by the opening banks. Thus the court’s Bank. At present, the file has been returned to the initial court and a request has been made for issuance of order resulted in the seizure of the assets which belong to Saderat Bank and Bank of Industry and Mine being writ and enforcement of judgment. equivalent to the amounts claimed by Saman Bank. Until the date of presenting financial statements, the court made its ruling on the two cases, brought against the Bank of Industry and Mine in favor of Saman Bank which Pasargad Bank upon finality of decree and issuance of a writ for execution of the court’s decision resulted in the collection of Rls. 666 billion comprising the original amount for Rls 499 billion, late payment penalty, litigation costs and As regards the discount of letters of credit for Pasargad Bank, this bank has filed a lawsuit versus the claims lawyer’s fee for the amount of Rls. 167 billion. brought by Saman Bank which was referred to the Bench No. 7 of Tehran Public Civil Court for investigation. The court-appointed expert examined the evidence and pleadings submitted by both parties and, upon full The legal actions taken so far concerning the letters of credit issued by the Bank Saderat are described in this inquiries into the matter, reported the breach and default by Pasargad Bank and Saman Bank’s entitlement to table: the claim to the court. The lawyer of Pasargad Bank has made an appeal against the court’s decision.
76 Annual Report 77 0 0 0 0
Net Net
2017 2017 38,367 71,321 Rls(m) 38,075 38,367 Rls(m) 71,321 38,075
535,648
764,286
535,647
764,286
1,345,084 4,786,323 5,657,669 2,088,736 7,504,759 6,651,518 1,345,084 4,786,323 5,657,669 2,088,736 7,504,759 6,651,518
86,277,587
11,990,829
86,059,672 11,990,829
127,750,201 127,532,286
0 0 0 0
Net Net Rls(m) 38,075 Rls(m) 38,076 111,948 640,347
319,608 111,948 640,348
319,608
1,306,585 5,598,262 1,395,641 8,380,998 9,898,048 2,306,664 9,264,177 1,306,586 5,598,262 1,395,641 8,380,999 9,780,841 2,306,664 9,264,176
76,120,338
22,455,947
75,799,052 22,399,186
137,836,638 137,341,385
) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) 0 0 0 0 0 0 0 0 0 0
35,369 Rls(m) 27,913 13,478 64,006 16,320 Rls(m) 58,183 35,369 27,913 13,478 64,006 15,456 58,183 112,968 ( 944,451 112,968 ( ( ( ( ( 942,666 ( ( ( ( ( (
(
(
(
( 1,016,522 Provision 4,423,306 Provision 1,016,522 4,418,413
6,712,516
6,704,974
( ( ( ( ( (
Doubtful debt Doubtful debt 0 0 0 0
Total Total Rls(m) Rls(m) 51,553 51,554 111,948 753,314 111,948 753,315
319,608 319,608
2,323,108 5,633,631 1,395,641 2,323,108 5,633,631 1,395,641 8,408,910 8,408,911 2,370,670 2,370,670 9,322,359 9,322,359
80,543,644
10,842,499 80,217,467 10,723,507 22,472,266 22,414,642
144,549,151 144,046,362
) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) 0 0 0 0 0 0 0 0 0 0 0 0
fee fee 278 278 ( ( 2,641 2,641
Rls(m) Rls(m) 10,149 10,149 21,127 21,127 ( ( 385,536 385,536 433,670 447,171 433,670 447,171
271,613
271,613 ( ( ( ( ( (
(
( ( Deferred Deferred ( ( ( 2,731,812 2,731,812 4,303,997 4,303,997
( ( ( (
interest and interest and
) Group ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Parent Company 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2018 2018 6,657 6,657 86,498 Rls(m) Rls(m) 86,498 61,811 ( 61,811 (
333,100 ( 333,100 109,450 109,450 ( ( ( interest interest
( ( ( ( 2,671,859 2,655,600 4,173,519 4,173,519 7,442,894 7,426,635
( Unrealized ( ( Unrealized ( ( (
) ) ) ) ) ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Rls(m) Rls(m) 46,416 46,416 ( ( accounts accounts Amounts Amounts
3,573,627 3,551,768 3,620,043 3,598,184 ( ( Muzarabeh Muzarabeh ( ( partnership partnership
received for received for
and joint civil and joint civil 0 0 0 0 0 0 0 0
246 246
Rls(m) Rls(m) 23,526 23,526 51,640 51,640 245,683 139,169 757,011 245,683
139,169 757,011
320,567 252,311 320,567 252,311
4,379,505 4,587,360 4,379,505 4,587,360 receivable Balance of receivable Balance of
11,106,349 11,106,349 21,863,367 21,863,367
late penalties late penalties 0 0 0 0 0 0 0 0
1,333 1,334 3,362 3,362 1,775 1,775
Rls(m) Rls(m) 11,779 11,779 and fee and fee 518,497 448,835 518,497 448,835
497,409 497,409 679,782 678,278 Balance Balance
8,372,353 1,112,390 8,351,109 1,110,998 1,539,167 1,539,167 of interest of interest recievable recievable
13,186,683 13,162,542
0 0 0 0
Rls(m) Rls(m) 28,892 28,893 111,948 506,297 111,948 506,298
378,089 378,089
interests interests 1,672,099 4,899,819 1,395,641 1,672,099 4,899,819 1,395,641 4,298,767 5,636,336 4,298,767 principal, 5,518,736 2,157,923 principal, 2,157,923
Balance of
Balance of
67,370,381 67,043,588 unrealized 24,483,646 unrealized 24,411,266 11,926,198 11,926,198
124,866,036 124,349,268 and deferred and deferred
Debtors of credit cards paid Debtors of LGs paid Debtors of LCs paid Loans granted in forex Other loans granted in rial Debtors of credit cards paid Debtors of LGs paid Interest free loan (Qarzolhasaneh) Debtors of LCs paid Estesna'a Loans granted in forex Murabahah (Sale contracts) Other loans granted in rial Interest free loan (Qarzolhasaneh) Factoring Estesna'a Civil partnership-(Mosharakat Madani) Murabahah (Sale contracts) Muzarabah (trade contracts) Factoring Civil partnership-(Mosharakat Madani) Salaf (future contracts) Muzarabah (trade contracts) Hire purchase Salaf (future contracts) Jealeh (service contracts) Hire purchase Jealeh (service contracts) Sales by installments Sales by installments 11- Loans granted to and amounts due from non-governmental entities/persons
78 Annual Report 79 11-1- Classification of Group loans granted to and amounts due from non-governmental entities/persons 11-2- Classification of the parent company loans granted to and amounts due from non-governmental based on the regulations adopted by the Money and Credit Council (Note 8-6 to the financial entities/persons based on the regulations adopted by the Money and Credit Council (Note 8-6 to the statements) breaks down as follows: financial statements) breaks down as follows:
Group Parent Company 2018 2018 Current Overdue outstanding doubtful Total Current Overdue outstanding doubtful Total Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Sales by installments 13,342,626 6,990 752 166,637 13,517,005 Sales by installments 13,342,626 6,990 752 166,637 13,517,005 Jealeh (service contracts) 23,603,661 24,099 19,545 1,694,552 25,341,855 Jealeh (service contracts) 23,677,544 24,098 19,545 1,694,553 25,415,739 Hire purchase 668,023 726 8,949 1,812,570 2,490,268 Hire purchase 668,024 726 8,949 1,812,570 2,490,269 Salaf (future contracts) 25,301 0 0 28,893 54,194 Salaf (future contracts) 25,301 0 0 28,893 54,195 Muzarabah (trade contracts) 6,997,720 62,968 83,261 4,192,137 11,336,086 Muzarabah (trade contracts) 6,997,720 62,968 83,261 4,192,137 11,336,086 Mosharakat Madani (Civil partnership) 68,084,793 4,593,962 1,244,932 12,925,396 86,849,083 Mosharakat Madani (Civil partnership) 68,084,793 4,593,962 1,244,932 12,925,396 86,849,083 Factoring 7,914,611 90,135 4,600 1,047,342 9,056,689 Factoring 8,033,603 90,135 4,600 1,047,342 9,175,681 Murabahah (Sale contracts) 32,127 463 187 882 33,660 Murabahah (Sale contracts) 380,165 463 187 882 381,696 Estesna'a 0 0 0 0 0 Estesna'a 0 0 0 0 0 Gharzolhasaneh (Interest free loan) 1,386,431 5,832 2,335 1,043 1,395,641 Gharzolhasaneh (Interest free loan) 1,386,431 5,832 2,335 1,043 1,395,641 Other loans granted in rial 0 0 0 0 0 Other loans granted in rial 0 0 0 0 0 Loans granted in forex 3,076,839 0 0 3,028,826 6,105,665 Loans granted in forex 3,076,839 0 0 3,028,826 6,105,664 Debtors of LCs paid 709,817 0 0 1,619,948 2,329,765 Debtors of LCs paid 709,817 0 0 1,619,948 2,329,765 Debtors of LGs paid 303,260 0 0 450,055 753,314 Debtors of LGs paid 303,260 0 0 450,055 753,314 Debtors of credit cards paid 111,948 0 0 0 111,948 Debtors of credit cards paid 111,948 0 0 0 111,948 126,257,158 4,785,175 1,364,561 26,968,281 159,375,173 126,798,071 4,785,173 1,364,561 26,968,282 159,916,087 Less: Less: Unrealized interest (7,426,635) 0 0 0 (7,426,635) Unrealized interest (7,442,894) 0 0 0 (7,442,894) Deferred Interest and fee 0 (285,362) (538,679) (3,479,956) (4,303,997) Deferred Interest and fee 0 (285,361) (538,679) (3,479,956) (4,303,995) Joint Civil partnership (3,551,768) 0 0 0 (3,551,768) Joint Civil partnership (46,416) 0 0 0 (46,416)
Amounts received for Muzarabah (trade contracts) (46,416) 0 0 0 (46,416) Amounts received for Muzarabah (trade contracts) (3,573,627) 0 0 0 (3,573,627)
Net loans granted before deducting provision Net loans granted before deducting provision 115,232,340 4,499,813 825,882 23,488,325 144,046,358 115,735,135 4,499,812 825,882 23,488,326 144,549,154 for doubtful debts for doubtful debts
General provision for doubtful debts (1,772,220) 0 0 0 (1,772,220) General provision for doubtful debts (1,779,762) 0 0 0 (1,779,762) specific provision for doubtful debts 0 (108,620) (153,472) (4,670,661) (4,932,753) specific provision for doubtful debts 0 (108,620) (153,472) (4,670,661) (4,932,754) Balance at March 20, 2018 113,460,120 4,391,192 672,410 18,817,664 137,341,385 Balance at March 20, 2018 113,955,373 4,391,192 672,410 18,817,665 137,836,638 Balance at March 20, 2017 106,428,475 1,690,419 2,886,757 16,526,634 127,532,286 Balance at March 20, 2017 106,646,390 1,690,419 2,886,757 16,526,634 127,750,201
80 Annual Report 81 11-3- Details of provision for doubtful debts of the parent company break down as follows: 11-6- Loans granted to and amounts due from non-governmental entities/ persons by a breakdown of the type of collateral 2018 2017
General Specific General Specific Total Total provision provision provision provision 2018 2017 Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Deposit 4,884,478 5,461,491 Balance at the beginning of the year 1,779,762 4,432,754 6,212,516 1,779,762 4,132,754 5,912,516 Participation bonds and other debt securities guaranteed by the government and CBI 0 0 Bad debts (Written-off) 0 0 0 0 0 0 Participation bonds and other debt securities guaranteed by other banks 11,961 6,761 Provision for current year 0 500,000 500,000 0 300,000 300,000 Banking letters of guarantee 474 6,295 Balance at the year-end 1,779,762 4,932,754 6,712,516 1,779,762 4,432,754 6,212,516 Letters of credit transacted 1,418,842 3,363,844 Shares listed on the stock exchange 2,737,695 2,044,871 11-4- Loans granted by the parent company in foreign currency by a Land and buildings 28,367,042 36,859,293 breakdown of payment resources Machinery 475,346 888,947 Checks and promissary notes 97,079,784 69,314,756 Other 9,573,531 16,016,458 2018 2017 144,549,154 133,962,715 Current Overdue Outstanding Doubtful Total Total Unsecured loans and claims (without security) 0 0 Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) 144,549,154 133,962,715 Local resources 1,981,819 0 0 4,052,902 6,034,721 4,750,747
Forex reserve account 0 0 0 70,945 70,945 70,945 Disclosure of collaterals in possession and their allocation based on the loan balances move from the most liquid ones to other items respectively. National Development Fund 0 0 0 0 0 0 Syndicated loans 0 0 0 0 0 0 1,981,819 0 0 4,123,847 6,105,666 4,821,692
11-5- Loans granted to and amounts due from non-governmental entities/ persons in terms of maturities and interest rates
2018 2017 12% and Over 24% 21 to 24% 18 to 21% 15 to 18% 12 to 15% Total Total less Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) 2017 and before 29,933,538 8,445,265 6,961,931 6,058,946 453,049 3,437,393 55,290,122 28,528,955 March 20, 2018 1,971,404 4,301,055 9,101,760 44,565,201 685,216 4,364,343 64,988,979 30,350,046 March 20, 2019 1,272,330 696,723 14,179 1,766,650 205,610 51,962 4,007,454 50,775,815 March 20, 2020 295,586 592,291 34,580 2,938,670 41,979 586,140 4,489,246 8,606,171 2022 and onward 1,007,513 374,929 21,561 3,896,702 3,832,504 6,640,144 15,773,353 15,701,728 34,480,371 14,410,263 16,134,011 59,226,169 5,218,358 15,079,982 144,549,154 133,962,715 March 20, 2017 44,800,974 21,593,942 15,182,409 35,818,857 4,828,597 11,737,936 133,962,715
82 Annual Report 83 ) ) ) ) ) ) ) ) ) ) )
0 0 0 0
Total Total 46,416 Rls(m) Rls(m) 500,000 282,680 (
( ( 7,012,432 7,107,999 6,212,516 3,736,999 3,573,627 6,712,516
14,510,541 11,721,866 21,958,933 13,045,725 287,878,484 36,469,476 18,734,298 ( 20,153,726 ( 21,863,366 36,469,476 ( 35,050,048 ( 13,186,682 35,050,048 (
101,512,920 299,484,713 (
(
(
137,836,638 113,119,149 127,750,201
) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
cards cards 38,367 38,367 Rls(m) Rls(m)
454,873 381,292
111,948 111,948
( Debtors of paid credit Debtors of paid credit
) ) ) ) ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0
47 47 ( (
1,333 1,333
Rls(m) Rls(m) 245,732 401,551 247,065 112,968 245,685 247,065 247,019 247,018 506,297 640,347 535,648 112,968
( 1,288,486 ( 1,183,740 Debtors of Debtors of
paid letters
paid letters
(
of guarantee
of guarantee ) ) ) ) ) 0 0 0 0 0 0 0 0 0 0 0 0
1,728 1,349 1,728 1,350
( ( Rls(m) Rls(m) 518,118 139,169
of credit 657,288 139,169 657,288 657,666 of credit
518,497 657,665
1,704,319 9,314,093 1,016,522 9,352,970 Debtors of Debtors of 1,665,442 1,306,586 1,345,084 1,016,522
paid letters
paid letters
( (
(
) ) ) ) ) ) 0 0 0 0 0 0 0 0 0 0
forex Loans forex Loans 35,369
35,369 Rls(m)
915,412 570,177 279,743 ( Rls(m) ( 347,794 213,234 567,618 356,943 112,193 167,550
757,011 915,412 448,835
(
3,906,279 9,067,060 8,545,554
granted in
1,205,846
4,427,785 5,598,261 4,786,323 ( (
granted in
1,205,846
(
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
loans Other in rial
loans Other in rial Rls(m) granted
Rls(m) granted
) 0 0 0 0 0 0 0 0 0 0 0 0 0
0
0 0 0 0 0 0 0 0 0 0 0 0
Rls(m) 764,286 949,776 318,421 764,286
( Rls(m) 1,395,641 1,395,641
(Free interest) Gharzolhasaneh (Free interest) Gharzolhasaneh
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
Rls(m) Estesna'e Rls(m) Exchange) Estesna'e Exchange) (Contracts of
(Contracts of
) ng the period included the accrued and cash interests and the amounts collected consisted of the collected collected the of consisted collected amounts the and interests cash and accrued the included period the ng )
) ) 0 0 0 0 0 0 0 0 0 0
0 0
(Sale 1,069 841 228 444 246 3,608 426
70,252
20,986
18,447 (Sale 71,321 ( 1,069 3,608 3,362 Rls(m)
369,605
123,857
( 316,000 319,608 20,542
18,021
( Rls(m)
contracts) (
Murabahah
contracts) Murabahah ) ) ) ) ) ) 0 0 0 0 0 0 0 0
0 0
27,913 27,913 Rls(m) 586,293 739,534 961,908 ( (
Factoring ( Rls(m)
5,134,346 5,099,288 459,260 197,725 2,188,642 541,808 159,575 802,331 4,876,914 3,531,997 497,410 8,380,998 5,657,669
(
Factoring ( ( 4,640,027 4,379,504 5,099,288 4,876,913
) ) ) ) ) ) ) ) ) 0 0 0 0 0
0 0 Civil
Civil
Rls(m) 500,000 ( Rls(m) 3,923,306 3,736,999 3,573,627 4,423,306
72,196,901 21,740,992 13,518,542 15,780,833 ( ( ( 19,478,700 64,638,570 76,120,338 86,277,587 partnership 8,176,127 5,342,415 ( 5,437,511
8,372,353
219,443,265 227,001,596
(
10,539,547 11,201,445 10,343,321
(
11,106,349 21,740,992 19,478,702 partnership
(
(
) ) ) ) ) ) ) ) 0 0 0 0 0 0
0 0
46,416 Rls(m) 944,451 282,680 ( 944,451
( ( Rls(m) 7,051,186 1,110,729 6,166,774 1,171,496 ( 570,157 2,972,749 601,340 1,638,521 974,615 663,907 5,699,749 5,189,166 9,898,048
Murabahah
(
(
( ( 11,990,829 1,516,848 4,649,926 6,166,774 5,699,749 1,112,389 4,587,359
Murabahah
) ) 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0
Salaf
26,252 25,301 13,478 (future Salaf 25,301 26,252 38,075 38,075 13,478 1,775 1,775 Rls(m)
(
( 23,526
(future 25,301 25,301 23,526
Rls(m)
contracts)
contracts) ) ) ) ) ) ) 0 0 0 0 0 0 0 0
0 0 Hire
7,708 339 Hire 58,902 64,006 36,065 ( ( 64,006
5,917 7,371 Rls(m)
202,802 281,153
( (
332,346
( 13,232 45,670 ( 11,778
purchase
Rls(m)
1,871,588
275,236
281,153 332,344 2,038,325 2,306,664 2,088,736 320,567
purchase
) ) ) ) ) ) 0 0 0 0 0 0 0 0
0 0
Jealeh 16,320 16,320
Rls(m) (service 512,860 ( 932,093 Jealeh ( 91,801 31,837
Rls(m)
(service 7,008,220
1,572,093 320,513 contracts) 192,347 1,152,860 ( 512,860 932,093 679,782 7,504,759 252,311
49,152,972
34,621,018
(
21,540,174 22,455,948 1,480,292 contracts) 1,121,023
(
(
) ) ) ) ) ) 0 0 0 0 0 0 0 0
0 0
58,183 58,183 4,051 Rls(m) 822,274 312,307 Sales by ( ( 23,680 32,011 ( 51,640
( Rls(m)
5,887,426 2,996,706
1,080,840 798,594 1,152,580 308,256
Sales by 1,590,807 822,274 7,731,553 9,264,177 6,651,518
(
( 1,048,829 1,590,807 1,539,167 installments
installments
11-7-1- Details of interests accrued on the loans granted to and amounts due from entities/persons 11-7- Details of loans granted to and amounts due from non-governmental entities/persons Interests receivable on loans loans on receivable Interests granted Balance at March 20, 2017 Interests on loans granted Balance at March 20, 2017 Balance at March 20, 2018 Increased during the year Collected during the year Effect of foreign exchange rate during the period Balance at March 20, 2018 Late penalties for loans loans for penalties Late granted Balance at March 20, 2017 Increased during the year Collected during the year Effect of foreign exchange rate during the period Balance at March 20, 2018 Principal loan amounts Balance at March 20, 2017 Balance at March 20, 2018 Provision for doubtful debts Balance at March 20, 2017 Increased during the year Granted during the year Bad debts (written-off) during the year Collected during the year Effect of forex exchange rates during the period Balance at March 20, 2018 Balance at March 20, 2018 Interest on loans granted Balance at March 20, 2017 Balance at March 20, 2017 Increased during the year Balance at March 20, 2018 Collected during the year Balance at March 20, 2017 Effect of forex exchange rates during the period Balance at March 20, 2018 Balance at March 20, 2018 Net loans granted Balance at March 20, 2017 The interest on loans included the granted as well late payment penalty. amount increased duri portion of accrued and cash interests during the period.
84 Annual Report 85 11-8- Loans granted to and amounts due from non-governmental entities/ 12- Investments in shares and other securities persons by a breakdown of customer type
Group 2018 2017 2018 2017
Provision for Provision for Note Current Long-term Total Current Long-term Total Gross amount Net Gross amount Net doubtful debts doubtful debts Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Investment in quickly marketable shares 12-1 1,426,900 127,355 1,554,254 710,417 84,943 795,359 Natural customers 34,909,173 (649,018) 34,260,154 35,664,831 (649,018) 35,015,813 Investment in other shares/stocks 12-2 7,100,912 856,305 7,957,218 0 113,697 113,697 Legal customers 106,199,748 (6,063,498) 100,136,250 95,214,920 (5,563,498) 89,651,422 Investment in other securities 12-3 3,401,931 109,035 3,510,966 12,781 132,135 144,915 Personnel 3,440,234 0 3,440,234 3,082,967 0 3,082,967 11,929,743 1,092,695 13,022,437 723,196 330,775 1,053,972 144,549,155 (6,712,516) 137,836,638 133,962,718 (6,212,516) 127,750,201
Parent Company 11-9- Loans granted by the Group to the affiliated companies are as follows: 2018 2017 Note Current Long-term Total Current Long-term Total Group Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) 2018 2017 Investment in quickly marketable shares 12-1 1,426,900 127,355 1,554,254 701,199 84,943 786,142 Interest Provision for Current Non-current Total Net Investment in other shares/stocks 12-2 7,100,912 1,269,816 8,370,728 1,236,355 626,262 1,862,617 rate doubtful debts Investment in other securities 12-3 3,401,931 109,035 3,510,966 0 129,035 129,035 Percentage Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) 11,929,743 1,506,206 13,435,948 1,937,554 840,241 2,777,794 Related parties Adonis Co. 18-22 53,993 0 (810) 53,183 91,822 53,993 0 (810) 53,183 91,823
11-10- Loans granted by the parent company to subsidiaries and affiliates are as follows:
Parent Company 2018 2017
Interest Provision for Current Non-current Total Total rate doubtful debts
Percentage Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Group companies
Saman Satellite 18 76,843 0 (1,153) 75,690 42,431 Communications Co.
Saman Brokerage Co. 18 292,387 0 (4,386) 288,001 109,486 Sepehr Mehr 22 64,095 0 (961) 63,133 65,999 Other related perties Adonis Co. 18-22 53,993 0 (810) 53,183 91,822 487,317 0 (7,310) 480,008 309,739
86 Annual Report 87 12-1- Parent company’s investments in quickly marketable shares are as follows: 0 0 0 0 0 260 Rls(m) Rls(m) 25,894
12-1-1- Current investments in quickly marketable shares 106,724 132,880 132,880 Market value Net sale value 2018 2017 2017 2017 Number of Net sale Net sale Origination shares Investment Cost value Cost value 0 0 260 Cost 4,704 value Rls(m) Rls(m) 79,979 84,943 84,943 649,208 percentage Rls(m) Rls(m) Rls(m) Rls(m) 587,147
Net book 1,236,355 Shares of companies listed on the stock exchange Isfahan Mubarakeh Steel Mill Purchase 10,956,434 0.01 18,021 31,197 20,069 22,949 Iran Construction Investment Co. 0 0.00 0 0 33,256 21,318 0 0
Iran Telecommunication 0 0.00 0 0 12 11 979 Rls(m) Rls(m) 99,145 41,760 141,884 141,884 1,396,499 5,704,413 7,100,912
Sina Bank 0 0.00 0 0 33,304 19,422 Market value Shomal Drilling Co. Purchase 1,538,445 0.06 8,140 2,558 11,489 7,227 Net sale value MAPNA Purchase 4,921,706 0.05 39,536 33,104 59,265 55,509
Bank Mellat 0 0.00 0 0 13,448 7,495 0 Iranian Leasing Purchase 1,029,258 0.10 1,960 1,582 56,198 45,215 0 575 value value Rls(m) Rls(m) 97,965 28,815 649,208 593,097 127,355 Saderat Bank Purchase 11,600,000 0.02 12,885 6,762 12,885 10,390 127,355
Net book Net book 1,242,305
Tooka Foulad Investment Co. Purchase 22,588,289 0.87 27,409 20,545 58,654 52,206 Tooka Foulad Investment Co. - rights 0 0.00 0 0 2,347 1,236 issue Bahman Group 0 0.00 0 0 35,268 26,255 0 0 0 0 0 0 0 0 0 Kharazmi Investment Purchase 2 0.00 0 0 42,158 23,872 0
Tooka Transport Purchase 1,954,536 0.59 4,341 3,515 19,936 25,498 Rls(m) Rls(m)
Oil Industry 0 0.00 0 0 2,505 1,783 Accumulated Accumulated value impairment value impairment Mines and Metals Investment Purchase 8,392,912 0.02 14,354 13,903 0 0 Development Co. Mines and Metals Investment Rights issue 358,388 0.00 255 255 0 0 0 0
Development Co. - rights issue 2018 2018 575 Cost Cost Rls(m) Rls(m) 97,965 28,815 649,208 593,097 127,355 127,355
Iran Khodro 0 0.00 0 0 10,292 8,136 1,242,305
Iran Khodro Investment Development Co. 0 0.00 0 0 2,389 1,746 Ansar Bank Purchase 5,703 0.00 13 12 8 5 Shiraz Petrochemical Co. - Urine salaf 0 0.00 0 0 14,037 16,160 Informatic services 0 0.00 0 0 2,703 2,724 0.54 4.81 4.78 32.33 Iran Copper Industries - rights issue Rights issue 240,000 0.00 240 391 0 0 27.87 Percentage Percentage Fars Development Co. Purchase 7,994,672 0.80 20,165 16,434 0 0 Investment Investment Takin Co. Purchase 1,540,071 1.71 16,887 16,249 0 0 Gol-e Gohar Purchase 1,979,402 0.01 5,756 6,395 0 0 Gol-e Gohar - right issue Rights issue 395,880 0.00 755 755 0 0 Taamin Oil and Gas Co. Purchase 8,768,825 0.01 12,541 13,573 0 0 shares shares Ghadir Investment Co. Purchase 8,639,294 0.01 11,978 10,175 0 0 309,535 Number of Number of 55,419,382 19,120,859 646,666,400 501,695,158
Bojnord Cement Co. Purchase 3,825,890 0.98 18,426 18,429 0 0 Middle East Bank Purchase 146,379,400 2.44 207,217 292,459 207,217 207,217 420,877 488,293 637,442 556,373 Shares of companies listed on the Farabourse (OTC) Purchase Purchase Purchase
Tooka Rail Purchase 4,000,000 0.20 10,491 6,702 50,318 40,161 Origination Origination Middle East Life Insurance Purchase 200,000 0.02 100 106 100 99 Alhavi Pharmaceutical Co. Purchase 1,277,010 0.35 6,205 4,440 6,205 5,366 Taliseh Nemouneh 0 0.00 0 0 1,629 1,674 A.S.P. 0 0.00 0 0 1,121 926 Sarcheshmeh Copper Purchase 7,585,499 0.38 42,906 40,608 0 0 Kharazmi IT Development Purchase 448,756 0.26 2,024 1,398 0 0 Isfahan Steel Mill Purchase 5,000,000 0.02 4,705 4,157 0 0 Asalouye Power - MAPNA Purchase 1,826,480 0.25 25,997 22,244 0 0 Kowsar Rail Track Purchase 3,886,582 0.82 10,753 9,251 0 0 Kayson Purchase 21,250,000 0.55 39,747 32,893 0 0 Kayson - Rights issue Rights issue 5,000,000 0.00 4,352 3,029 0 0 Kerman Development Co. Purchase 44,781 0.01 210 231 0 0 Miras Farhangi Investment Co. Purchase 10,000,000 0.33 19,689 19,280 0 0 Saman Insurance Co. Purchase 230,043,110 15.34 178,001 794,269 96,600 96,600 345,180 938,607 155,972 144,826 Investments in other shares are as follows: 766,057 1,426,900 793,414 701,199 Added (Less): 12-2-1- Current investments in other shares 12-1-2- Long-term investments in quickly marketable shares Cost price adjustment 660,842 0 (92,215) 0 12-2- Shares of companies listed on Farabourse Co. (OTC) Plastiran Hamedan Glass Works Kardan Investment Bank Iran Pump Manufacturing Co. Saman Electronic Payment Co. 1,426,900 1,426,900 701,199 701,199 Shares of companies listed on the Stock Exchange
88 Annual Report 89 . 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Rls(m) Rls(m) Market value Market value 2017 2017
0 0 0 0 0 0 0 5 5 0 0 0 0 0 0 0 5
60 75 10
10
155 490 101 490
105
7,975 3,243 9,315 6,141 2,182 value 9,315 4,566 3,243 7,975 value
Rls(m) 15,050 45,297 68,400
Rls(m)
68,400 15,050 46,405 40,561
103,473 112,529 214,625 113,697 626,262 557,862 Net book
Net book
5 5 5
24 75 10
10
490 101 614 490
1,935 3,238 3,070 8,100 3,098 3,243 9,315 7,559 2,674 3,100 2,000 8,608 3,867 9,315 2,683 3,243
Rls(m)
27,090 68,400
Rls(m) 68,400 15,483 34,214 27,090 46,405 61,064
326,945 210,000 621,790 354,528
354,528 240,000 103,473 128,895 112,529 215,625
1,044,719 1,422,963 1,000,035
Market value Market value
) 5 5 5
60 50 24 75 10
10
490 105 101 490 614
105
3,251 3,243 7,975 9,315 2,674 3,100 5,967 8,608 3,867 value 9,315 4,566 3,243 7,975 value
Rls(m)
17,046 20,000 27,090 68,400
Rls(m)
( 68,400 15,483 46,405 27,090 61,064
326,945 433,377 354,528
354,528 240,000 103,473 112,529 215,625 856,305 846,888
Net book
Net book
1,269,816
) ) ) ) ) ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3,867 3,867 value 8,331 value 3,867 8,331 8,331 Group Rls(m) Rls(m) ( ( ( ( ( ( impairment impairment Accumulated Accumulated Parent Company 5 5
24 60 50 75 10
490 105 101 490 614 5.25 9.97 Cost
Cost 2018 3,251 2,674 3,243 7,975 9,315 3,100 5,967 8,608
2018
Rls(m) 17,046 20,000 27,090 68,400 Rls(m) 68,400 105.00
326,945 437,244 354,528
354,528 860,172 855,219 9,315.20 4,566.00 3,243.03 7,975.00
15,482.88 54,735.74 27,090.00 61,064.44 1,278,148
240,000.00 103,473.32 112,528.56 215,625.00
0 1 0 0
15 49 49 15 12
100 0.00 0.02 6.42 3.19 1.31 0.76 0.07 0.30 0.12 0.35 34.5 3.87 1.31 0.76 6.42 0.07 0.30 3.19
0.105 20.00 15.00 99.15 99.70 48.08 96.69 75.25
0.0042 0.0003 0.0003 0.0029 100.00
0.00048 0.00062
Percentage Investment Percentage Investment 49
490
3,100 9,970 8,600 1,500 1,500 9,970
24,161 70,000 75,100 shares shares
719,144 416,665 874,999 189,522 963,246 100,000 963,246 874,999
2,674,000 6,195,000 7,209,990 5,400,000 4,566,000
Number of 15,950,000 22,304,000 20,000,000 27,090,000 12,000,000 Number of 12,000,000 24,000,000 15,482,880 22,304,000 49,000,000 27,090,000 15,950,000 96,155,556 21,175,000 37,624,000
273,708,077 172,519,782
172,519,782 100,000,000
Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Origination Origination Establishment Establishment Establishment Establishment Establishment Establishment Establishment Establishment and acquisition
12-2-2- Long-term investment in other shares Others Alborz Pharmaceutical Raw Materials Ghaemshahr Textile Co. Iran Farabourse (Public Joint Stock) Tehran Stock Brokers' Co. Samaneh Kish Electronic Payment Segal IT Software Co. Central Securities Depository and Settlement Co. Shaparak Electronic Payment Co. Iran Energy Exchange Stock Exchange Co. Kardan Investment Bank Tosee Omid Atieh Andish Co. Saman Investment Development Co. Iran Credit Rating Co. Exchange Information and Services Co. Iran Investment Co. Karoon Cement Co. Investment in Mutual Funds Sarv Zarrin Atlas Persian Gulf International Goods and Services Middle East Bank Atieh Alborz Trade Development Rightel Ijarah bonds Saman Aftab Tejarat Added: Investment prepayment in C.I.P. shares (Iranian Pars Technology) Investment prepayment in Saman Investment Development Co. shares Investment prepayment in Saman Investment Development Co. shares Added: Investment prepayment in C.I.P. shares (Iranian Pars Technology) Kish Cell Pars Co. Adonis IT Service Development Co. Shaparak Electronic Payment Co. Aftab Tejarat Saman Iran Energy Exchange Hafez Saman Iranian Credit Scoring Co. Iran Credit Rating Co. Stock Exchange Co. Saman Processing (Pardazeshgaran) Saman Financial & Economic Development Group Iran Investment Co. Saman Satelite Communication Co. Saman Exchange Co. Central Securities Depository and Settlement Co. Saman Brokerage Co.
90 Annual Report 91 12-2-3- Details of Saman Bank subsidiary and affiliated companies are as follows: 13- Long-term investments in affiliated companies
Domicile Invesment percentage Auditing firm Main activities Group Parent Company Group Subsidiaries Share of net Share of total Goodwill assets net assets Investment, brokerage and financial Saman Brokerage Co. Tehran 75 75 Sokhan Hagh services Rls(m) Rls(m) Rls(m) Credit rating services, preventive Hafez Saman Iranian Credit Scoring Co. Tehran 99.15 99.15 Sokhan Hagh measures of past-due claims, and Balance at the beginning of the year 1,681,677 109,310 1,790,987 follow-up and collection of claims Asquisition during the year 248,709 0 248,709 Scientific and research activities in Tondar Noor Tehran 100 0 Sokhan Hagh computer, development and sale of Partial payment of subscribed capital 0 0 0 software Share of profit in affiliates before goodwill depreciation (19,197) 0 (19,197) Azmoon Pardaz Saman Exchange Co. Tehran 96.46 96.46 Trading foreign currencies Dividends received or receivable during the year (8,709) 0 (8,709) Iran Mashhood Goodwil depreciation 0 0 0 Azmoon Pardaz Providing services for data transfer, Saman Satelite Communication Co. Tehran 54.48 48.08 communication and satellite Change in category (1,604,816) (109,310) (1,714,126) Iran Mashhood telecommunication 297,664 0 297,664 Design, development and support of core Saman Processing (Pardazeshgaran) Tehran 100 100 Sokhan Hagh banking-based products, applications and tools
Saman Financial and Economic Provision of technical and engineering Tehran 100 99.7 Bayat Rayan services Development Group 14- Amounts due from subsidiaries and affiliates Atieh Andishan Sepehr Shargh Services Ajabshir 100 0 Bayat Rayan Production of iron ingots from iron Development scrappings Group Azmoon Pardaz Provision of technical and engineering Atieh Andishan Sepehr Mehr Co. Tehran 100 0 services, purchase and sale of all Iran Mashhood authorized goods and commodities 2018 2017 Doubtful debts Affiliates Balance due Net Net provision Kish Rls(m) Rls(m) Rls(m) Rls(m) Kish Cell Pars Co. 20.0 20.0 Roshangar Basir Operator and telecommunication Island services Due from subsidiaries 458,719 0 458,719 73,868 Provision of services in IT, Adonis Electronic Services Co. Tehran 24.19 4 Mokhtar and Co. computer devices, electronic and Due from affiliates 0 0 0 2,053 telecommunication equipment 458,720 0 458,720 75,921
12-3- Investments in other securities are as follows: Parent company
Issuer Origination Type of security Interest rate 2018 2017 2018 2017 Percentage Rls(m) Rls(m) Doubtful debts Balance due Net Net provision Government and state-run corporations Rls(m) Rls(m) Rls(m) Rls(m) Shahrivar Sevom Intermediary Co. Purchase Sukuk Bonds 20 291,190 0 Ministry of Economic Affairs & Finance Purchase Islamic treasury bonds 0 10,000 0 Due from subsidiaries 2,928,844 0 2,928,844 2,800,881 Tir Sevom Intermediary Co. (Ltd.) Purchase Sukuk Bonds 20 1,898 0 Due from affiliates 0 0 0 2,053 Mehr Intermediary Co. (Ltd.) Purchase Sukuk Bonds 20 55 0 2,928,844 0 2,928,844 2,802,935 Bahman Sevom Intermediary Co. (Ltd.) Purchase Sukuk Bonds 17 34,800 0 Shahrivar Chaharom Intermediary Co. (Ltd.) Purchase Sukuk Bonds 20 3,033,200 0 Banks Other companies and mutual funds Novin Saman Fixed-Income Fund Establishment Privileged investment unit 0 0 15,000 Ordinary & privileged Saman Joint Venture Fund - Yekom Establishment 4.85 10,000 15,000 invest units Agah Charity Fund - Yekom Establishment Privileged investment unit 20.57 2,500 2,500 Amin Saman Mutual Fund Establishment Privileged investment unit 18.59 10,000 10,000 Iran Capital Market Development Mutual Fund Establishment Ordinary investment unit 22.73 35,000 35,000 Nik-Andishan Honar Charity Mutual Fund Purchase Ordinary investment unit 24.90 2,535 2,535 Negin Saman Fixed-Income Fund Establishment Privileged investment unit 17.99 49,000 49,000 Tir Yekom Intermediary Co. (Ltd.) Purchase Sukuk Bonds 20 800 0 Khordad Dovom Intermediary Co. (Ltd.) Purchase Sukuk Bonds 21 29,938 0 Mehr Yekom Intermediary Co. (Ltd.) Purchase Sukuk Bonds 20.00 50 0 3,510,966 129,035
92 Annual Report 93 14-1- Considering the fact that the fiscal year of Group Companies will end on 21st December of each year 14-3- Pursuant to the directive adopted by the Money and Credit Council (Note 8-6), the amounts due from (end of Azar based on the Iranian calendar year) namely three months earlier than the end of the subsidiary and affiliated companies are classified as follows: bank’s fiscal year, the amounts due from subsidiaries have not been entirely eliminated in consolidated operations. Whereas such amounts do not affect the consolidated financial statements in their entirety, 2018 adjustments have not been therein made (in accordance with the accounting standards). Current Overdue Outstanding Doubtful Total 14-2- The balances of the parent company’s amounts due from subsidiaries and affiliates based on the debts inter-group transactions consist of the following: Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Due from subsidiaries 2,928,844 0 0 0 2,928,844 2018 Due from affiliates 0 0 0 0 0 Provisional Provisional Assets and Assets and Services amounts amounts Dividends Dividends Dividends Net amounts due from subsidiaries and affiliates Name of subsidiary/affiliate investments investments Total purchased received (on- paid (on- recievable recievable payable 2,928,844 0 0 0 2,928,844 sold purchased before deduction of doubtful debts provision account) account)
Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) General provision for doubtful debts 0 0 0 0 0 Saman Exchange Co. 0 0 5,564 0 5,079 0 331,878 0 342,521 Specific provision for doubtful debts 0 0 0 0 0 Hafez Saman Iranian Balance at March 20, 2018 2,928,844 0 0 0 2,928,844 0 0 0 0 26,144 0 71,365 0 97,509 Credit Scoring Co. Balance at March 21, 2017 2,802,935 0 0 0 2,802,935 Saman Processing 0 62,423 0 0 172,583 0 31,500 0 266,506 (Pardazeshgaran) Saman Brokerage Co. 0 0 0 0 1,785 0 5,765 0 7,549 15- Other accounts receivable Adonis Co. 0 0 0 0 0 0 0 0 0 Satelite Communication Co. 0 0 0 0 2,897 0 19,235 0 22,132 Group Atieh Andishan Sepehr 0 1,970,676 0 0 30 0 2,518 0 1,973,224 Shargh 2018 2017 Atieh Andishan Sepehr Mehr 0 0 0 0 9,304 0 0 0 9,305 Specific provision General provision Balance due for doubtful for doubtful Net Net Atieh Andishan Sepehr Shargh 0 0 0 0 210,098 0 0 0 210,098 debts debts Services Development Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) 0 2,033,099 5,564 0 427,919 0 462,261 0 2,928,844 Dividends receivable from Net transactions profit (loss) 1,309,599 0 0 1,309,599 971,076 0 companies Interest accrued (realized) on 0 0 0 0 0 participation bonds 2017 Amounts due from personnel 0 0 0 0 0 Provisional Provisional Assets and Assets and Temporary debtors 40,586,103 (281,256) (14,718) 40,290,129 24,430,123 Services amounts amounts Dividends Dividends Dividends Name of subsidiary/affiliate investments investments Total purchased received paid (on- recievable recievable payable sold purchased 41,895,702 (281,256) (14,718) 41,599,727 25,401,199 (on-account) account)
Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Saman Exchange Co. 0 0 5,564 0 2,246 0 284,561 0 292,370 Parent company Hafez Saman Iranian 0 0 0 0 24,912 0 54,533 0 79,445 Credit Scoring Co. Note 2018 2017 Saman Processing Specific provision General provision 0 62,423 0 0 116,395 0 31,500 0 210,318 (Pardazeshgaran) Balance due for doubtful for doubtful Net Net debts debts Saman Brokerage Co. 0 0 0 0 357 0 4,800 0 5,157 Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Adonis Co. 0 0 2,025 0 28 0 0 0 2,053 Dividends receivable from Satelite Communication Co. 0 0 0 0 1,882 0 32,694 0 34,576 15-1 1,301,604 0 0 1,301,604 960,956 companies Atieh Andishan Sepehr 0 1,970,676 0 0 30 0 2,518 0 1,973,224 Interest accrued (realized) Shargh 0 0 0 0 0 on participation bonds Atieh Andishan Sepehr Mehr 0 0 0 0 5,792 0 0 0 5,792 Amounts due from personnel 0 0 0 0 0 Atieh Andishan Sepehr Shargh 0 0 0 0 200,000 0 0 0 200,000 Temporary debtors 15-2 39,226,946 (154,051) (14,718) 39,058,174 22,902,480 Services Development 40,528,550 (154,051) (14,718) 40,359,781 23,863,436 0 2,033,099 7,589 0 351,642 0 410,606 0 2,802,935 Net transactions profit (loss) 0
94 Annual Report 95 15-1- The balances of dividends receivable excluding the dividends from subsidiaries and affiliates are as 15-2- Balances due by temporary debtors consist of the following: follows: 2018 2017
2018 2017 Rls(m) Rls(m) Rls(m) Rls(m) Items related to loan facilities Companies listed on the stock exchange and Farabourse (OTC) Proceeding and debt collection costs 2,654,871 2,070,253 Shomal Drilling Co. 22,038 32,904 2,654,871 2,070,253 Housing Investment Co. 4,090 4,090 Items unrelated to loan facilities Mines and Metals Development Co. 6,880 6,880 Debtors for sale of assets 35,082,462 18,240,222 Barez Industrial Co. 2 2 Debtors for sale of investments 751,000 1,957,000 Bahman Group 5,349 2,365 Debtors for financial fraud (abuses) 0 0 Tooka Foulad Investment 19,992 13,959 Temporary debtors of forex 699,182 600,596 Sepah Investment Co. 8,800 11,781 Other 39,432 34,409 Tooka Transport Co. 908 0 36,572,075 20,832,227 Rayan Saipa 28 28 39,226,946 22,902,480 Isfahan Mobarakeh Steel Mill 1,446 4,003 Mapna Group 1,180 1,844 Saman Insurance Co. 5 62,348 15-3- Pursuant to the directive adopted by the Money and Credit Council (Note 7.6.) other accounts receivable Iran Pump Manufacturing Co. 4,218 2,850 are classified as follows: Hamedan Glass Works 12,242 3,775 2018 Central Securities Depository and Settlement Co. 0 1,914 Current Overdue Outstanding Doubtful Total Omid Investment Co. 0 2,172 Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Kharazmi Investment Co. 0 10,440 Dividends receivable 1,301,604 0 0 0 1,301,604 Tooka Rail 0 5,999 Interest accrued (realized) on participation bonds 0 0 0 0 0 Middle East Bank 20,231 8,925 Amounts due from personnel 0 0 0 0 0 Sina Bank 0 3,374 Temporary debtors 36,572,075 0 0 2,654,871 39,226,946 Passargad Bank 0 2,986 Net amounts due from other accounts receivable before Saman Kish Electronic Payment Co. 832,579 504,313 37,873,679 0 0 2,654,871 40,528,550 deduction of doubtful debts provision Kardan Investment Bank 352,856 264,600 General provision for doubtful debts 0 0 0 (14,718) (14,718) Others 5,360 7,443 Specific provision for doubtful debts 0 0 0 (154,052) (154,052) 1,298,202 958,994 Balance at March 20, 2018 37,873,679 0 0 2,486,101 40,359,781 Other companies Balance at March 21, 2017 21,793,183 0 0 2,070,253 23,863,435 Saman Aftab Tejarat 3,402 1,962 3,402 1,962 1,301,604 960,956
96 Annual Report 97 ) ) ) ) ) ) ) 16- Orders and prepayments ) Total 5,757 Rls(m)
46,281 101,677 516,460 438,287 607,314 132,091 751,995 411,246 213,679 994,436 (
( ( ( ( ( ( 8,704,296 1,149,131 1,297,936 6,109,442 4,142,138 3,668,807 2,594,854 3,380,626 1,825,026 5,967,164 2,300,962 5,969,768
(
Group 2018 2017 ) ) Rls(m) Rls(m) 0 0 0 0
Prepayments 40,532 11,148 Rls(m) in stock 144,941 286,565 257,645 144,941 114,856 141,835 316,650 230,666 114,856 141,835
( (
Orders 23,296 19,299 Capital items
63,828 30,447 ) ) ) 0 0 0 8
(
Rls(m) 27,113 76,897 96,090 97,291 75,688 96,090 97,291 Orders
219,854 219,854 150,877
(
(
and capital 17- Inventory (materials and goods) prepayments ) 0 0 0 0
Group 6,720 Rls(m)
45,422
498,318 320,033 498,318 550,460 749,180 121,313 550,460 749,180
Assets in
(
process of 2018 2017 completion Rls(m) Rls(m) ) ) Inventory in stock 220,506 234,458 ) 0 0 0 0 0 0 0
and 4,904 5,731 6,486 Rls(m) 15,400 13,636 48,238 38,282 22,894 51,765 96,516 32,370 ( ( Ongoing projects in the process of completion 35,037 70,764 (
134,798
122,400 136,036 145,294 187,801
in leased
buildings Renovation 255,543 305,222 improvement ) ) ) ) ) ) 0 0 0 0
195 195 ( (
Group Rls(m) 23,283 75,206 22,906 34,528 235,724 414,522 170,233 972,548 296,101 fixtures ( ( ( (
2,549,142 1,318,269 1,216,837 1,230,873 1,469,540 1,883,867 2,686,377 The inventory of goods and spare parts owned by the Group has been put under insurance coverage up 2,856,415
17-1- to the mount of Rls. 170,000/- million against possible risks and accidents resulting from fire, flood and Furniture and earthquake. ) ) ) 0 0 0 0 0 0
519 453
( 7,252 2,798 1,463
Rls(m)
94,909 19,546 15,162 54,228 58,113 49,231 40,681 14,326 ( ( 53,544 69,225
111,657 118,456 Vehicles
) ) ) 0 0 0 0 0 0 0
7,665 Rls(m) 24,817 31,216 62,883 27,168 ( 91,288
184,050 215,717
939,243
275,338 122,504 338,221
( 2,976,177 1,965,149 1,011,028 2,725,656
Equipment (
0 0 0 0 0 0 0 0 0 0 0
4,579 4,122 8,968 8,511 2,417 Rls(m)
21,670 11,385 10,285 21,670 17,281 25,792 12,702
Installations ) ) ) ) ) ) ) 5,757 Rls(m)
37,345 14,900 65,905 46,605 49,520 12,716 72,049 75,552
478,544 191,126 956,787 104,783 988,214 837,541 205,471 245,738 281,778
464,985 183,108
( ( ( 909,590
( ( ( ( Buildings 1,162,258 1,063,766
) ) ) ) 0 0 0 0 0 0 0
Land Rls(m) 16,000 61,735
902,229 347,415 166,759 902,229 901,656 545,187 302,253 236,874 286,354 ( 901,656 545,187
( ( (
Cost price Balance at March 21, 2016 Increase during the year Increase (decrease) from revaluation Depreciation during the year and value impairment Assets sold Assets sold Transfers and other changes Increase during the year Transfers and other changes Book value At March 21, 2016 Balance at March 20, 2017 Increase (decrease) from revaluation Balance at March 20, 2018 At March 20, 2017 Assets sold At March 20, 2018 Transfers and other changes Accumulated depreciation and accumulated value impairment Balance at March 21, 2016 Balance at March 20, 2018 Depreciation during the year and value impairment Assets sold Transfers and other changes Balance at March 20, 2017 18- Tangible fixed assets
98 Annual Report 99 ) ) ) ) ) ) The book value of revaluated land and buildings on the cost price basis is described as follows:
) 18-1- ) 0
Total 5,579 2018 2017 Rls(m) 47,127 ( 101,677 391,808 474,477 607,244 357,033 132,091 751,869 411,246 205,872
(
( ( ( ( ( ( 3,593,858 3,613,037 2,972,625 5,077,719 1,062,136 1,082,143 1,483,861 2,091,568 5,277,255 5,064,193 1,664,218
Based on cost price Based on revaluation Based on cost price Based on revaluation
Rls(m) Rls(m) Rls(m) Rls(m) ) ) Land 860,696 415,738 926,973 794,395 0 0 0 0
Buildings 702,053 777,578 1,336,622 939,710 stock Rls(m) 145,184 115,098 142,077 145,184 286,565 257,645 316,650 230,666 115,098 142,077
( (
1,562,749 1,193,316 2,263,595 1,734,105 Capital items in ) ) ) 0 0 0 8
(
18-2- All tangible fixed assets owned by the bank have been insured up to the amount of Rls. 5,584,840/ million 4,979 Rls(m)
90,272 19,555 16,382 29,721 75,688 90,272 19,555 Orders
103,611 103,611
( (
and capital against possible risks and accidents arising from fire, flood and earthquake. Motor vehicles have also prepayments been put under body/average insurance coverage up to the amount of Rls. 98,201/ million. Furthermore the tangible fixed assets and motor vehicles owned by the group have been insured up to the amount of ) Rls. 8,223,746/ million against possible risks and accidents resulting from fire, flood and earthquake. 0 0 0 0 0
A major portion of the assets in the process of completion is related to the land owned by the Yazd 134
Rls(m) 447,421 447,555 601,242 447,421 275,000 121,313 447,555 601,242
Assets in
( Branch and the ground floor of a building located on Africa Avenue which do not require any insurance
process of completion coverage while the residual amount is related to the land located in Tajrish and has remained uninsured as the transfer process has not been duly finalized. ) ) ) 0 0 0 0 0 0 0
5,731 5,579 Rls(m) 37,757 22,895 51,767 22,590 48,238 95,609 32,370 13,636 10,662 ( (
133,366
( 136,035 145,295 187,802 122,400
in leased
buildings improvement Renovation and ) ) ) ) Parent Company 0 0 0 0 0 0
195 195 ( (
Rls(m) 23,213 22,763 943,916 224,972 164,418 285,585 408,457 fixtures ( (
1,249,018 1,187,955 2,421,495 1,172,477 1,843,561 2,623,253 2,787,477 1,435,298
Furniture and ) ) 0 0 0 0 0 0 0 0
328 328 ( ( 7,252
Rls(m)
46,380 50,803 42,893 83,057 16,950 36,677 12,526 15,162 64,038 49,203
100,007 106,931 Vehicles
0
0 0 0 0 0 0 0 0 0 0 0
8,968 8,511 4,122 2,417 4,579 Rls(m)
11,385 21,670 10,285 17,282 21,670 25,792 12,702
Installations ) ) ) ) ) 0 0 0
Rls(m) 14,900 58,910 32,643 46,605 30,652 44,615
819,869 895,096 746,926 988,682 478,544 183,170 104,783 168,813
245,738 281,778 464,985 183,108
( 939,710 777,578
( ( ( ( Buildings
) ) ) 0 0 0 0 0 0 0 0 0 0 0
Land Rls(m) 16,000
733,233 794,395 415,738 733,233 347,415 144,570 302,253 236,874 286,354 794,395 415,738
( ( (
Transfers and other changes Balance at March 20, 2018 Book value At March 21, 2016 At March 20, 2017 At March 20, 2018 Cost price Balance at March 21, 2016 Increase during the year Increase (decrease) from revaluation Assets sold Transfers and other changes Balance at March 20, 2017 Increase during the year Increase (decrease) from revaluation Assets sold Transfers and other changes Balance at March 20, 2018 Accumulated depreciation and accumulated value impairment Balance at March 21, 2016 Depreciation during the year and value impairment Assets sold Transfers and other changes Balance at March 20, 2017 Depreciation during the year and value impairment Assets sold
100 Annual Report 101 19- Intangible assets
Group Parent Company
Goodwill for Software Royalty to use Goodwill for Software Royalty to use Software Total Software Total place of business development public utilities place of business development public utilities
Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Cost price Cost price Balance at March 21, 2016 4,015,494 151,289 0 39,829 4,206,612 Balance at March 21, 2016 4,015,494 146,306 21,352 4,183,152 Increase during the year 0 50,398 0 338 50,736 Increase during the year 0 46,958 313 47,271 In-company improvement 0 0 0 0 0 In-company improvement 0 0 0 0 0 Increase (decrease) from revaluation 1,291,807 0 0 0 1,291,807 Increase (decrease) from revaluation 1,291,807 0 0 0 1,291,807 Assets sold (1,103,934) 0 0 0 (1,103,934) Assets sold (1,103,934) 0 0 0 (1,103,934) Transfers and other changes 0 (12,838) 0 (2,897) (15,735) Transfers and other changes 0 0 0 (118) (118) Balance at March 20, 2017 4,203,367 188,849 0 37,270 4,429,486 Balance at March 20, 2017 4,203,367 193,264 0 21,547 4,418,178 Balance at March 21, 2017 4,203,367 188,849 0 37,270 4,429,486 Balance at March 21, 2017 4,203,367 193,264 0 21,547 4,418,178 Increase during the year 317,516 147,619 0 525 465,660 Increase during the year 317,516 147,619 525 465,660 In-company development process 0 0 0 0 0 In-company development process 0 0 0 0 Increase (decrease) from revaluation (760,086) 0 0 0 (760,086) Increase (decrease) from revaluation (760,086) 0 0 (760,086) Assets sold (1,738,482) 0 0 0 (1,738,482) Assets sold (1,738,482) 0 0 (1,738,482) Transfers and other changes 0 (48,097) 0 (22) (48,119) Transfers and other changes 0 (1,821) (22) (1,843) Balance at March 20, 2018 2,022,315 288,371 0 37,773 2,348,459 Balance at March 20, 2018 2,022,315 339,062 0 22,050 2,383,427 Accumulated depreciation and Accumulated depreciation and accumulated value impairment accumulated value impairment Balance at March 21, 2016 0 63,451 0 15,027 78,478 Balance at March 21, 2016 0 (63,588) 0 0 (63,588) Depreciation during the year 0 55,566 0 3 55,569 Depreciation during the year 0 (53,401) 0 0 (53,401) Value impairment loss 0 0 0 0 0 Value impairment loss 0 0 0 0 0 Assets sold 0 0 0 0 0 Assets sold 0 0 0 0 0 Transfers and other changes 0 (773) 0 0 (773) Transfers and other changes 0 0 0 0 0 Balance at March 20, 2017 0 118,245 0 15,030 133,274 Balance at March 20, 2017 0 (116,989) 0 0 (116,989) Balance at March 21, 2017 0 118,245 0 15,030 133,275 Balance at March 21, 2017 0 (116,989) 0 0 (116,989) Depreciation during the year 50,097 147 50,244 Depreciation during the year 0 (50,097) 0 0 (50,097) Value impairment loss 0 0 0 Value impairment loss 0 0 0 0 0 Assets sold 0 0 0 Assets sold 0 0 0 0 0 Transfers and other changes (16,187) 0 (16,187) Transfers and other changes 0 0 0 0 0 Balance at March 20, 2018 0 152,155 0 15,177 167,332 Balance at March 20, 2018 0 (167,086) 0 0 (167,086) Book value Book value At March 21, 2016 4,015,494 87,838 0 24,802 4,128,134 At March 21, 2016 4,015,494 82,717 0 0 21,352 4,119,563 At March 20, 2017 4,203,367 70,604 0 22,240 4,296,212 At March 20, 2017 4,203,367 76,275 0 0 21,547 4,301,189 At March 20, 2018 2,022,315 136,216 0 22,596 2,181,127 At March 20, 2018 2,022,315 171,976 0 0 22,050 0 2,216,341
102 Annual Report 103 19-1- The book value of the revaluated goodwill for place of business on the cost price basis is described as 21-1- Customers’ net debts for term LCs follows:
2018 2017 2018 2017 Rls(m) Rls(m) Based on cost price Based on revaluation Based on cost price Based on revaluation Customers' debts for term LCs - in rial 7,290 10,772 Rls(m) Rls(m) Rls(m) Rls(m) Customers' debts for term LCs - in forex 2,127,749 475,209 Goodwill for place of business 1,301,612 2,022,315 1,695,926 4,203,367 2,135,039 485,981 1,301,612 2,022,315 1,695,926 4,203,367 Less: Advances and mid-payments received for term LCs - in rial (215,983) (9,661) Advances and mid-payments received for term LCs - in forex (60,328) (3,131) 20- Statutory deposit General provision for doubtful debts 0 0 1,858,727 473,189 2018 2017 Rls(m) Rls(m) Statutory deposit - deposits of mainland branches (Rial) 27,262,396 22,782,959 21-2- Foreclosed collaterals Statutory deposit - deposits of mainland branches (Forex) 0 0 The composition of the foreclosed collaterals balance breaks down as follows: Statutory deposit - deposits of free zones branches (Rial) 216,169 252,725 Statutory deposit - deposits of free zones branches (Forex) 0 0 Foreclosed during Sold/transferred 2017 2018 Statutory deposit placed with central banks of other countries (Forex) 0 0 the year during the year 27,478,565 23,035,684 Rls(m) Rls(m) Rls(m) Rls(m) Movable properties Furniture 0 0 0 0 20-1- The statutory deposits placed with the Central Bank of Iran pursuant to paragraph 3 of article 14 of the Equipment 0 0 0 0 Monetary and Banking Law has been calculated on the basis of the rates determined by the Money and Goods 0 0 0 0 Credit Council and approved by the Central Bank of Iran. Motor vehicles 0 0 0 0 0 0 0 0 21- Other assets Immovable properties Residential properties 5,368,409 2,385,428 (786,100) 6,967,737 Group Parent Company Business/Offiice properties 10,298,942 7,289,400 (6,501,665) 11,086,676 Note 2018 2017 2018 2017 Factory/plant 4,426,484 1,225,553 (480,000) 5,172,036 Rls(m) Rls(m) Rls(m) Rls(m) Land 3,959,408 232,293 (1,685,234) 2,506,467 Customers' net debts for term LCs 21-1 1,858,727 452,565 1,858,727 473,189 24,053,243 11,132,673 (9,452,999) 25,732,917 Foreclosed collaterals 21-2 25,661,993 24,053,243 25,732,917 24,053,243 24,053,243 11,132,673 (9,452,999) 25,732,917 Non-operating real estates 0 0 0 0 Accumulated value impairement 0 0 Assets insurance prepayment 0 0 0 0 24,053,243 25,732,917 Tax prepayment 7,336 14,018 0 0 Profit (loss) from sales 3,283,507 7,398,403 Prepayment for leased branches 29,707 29,130 29,707 29,130 Other prepayments 0 10,948 0 1 (supplies)Inventory 0 0 0 0 21-2-1- The age of the balance of immovable foreclosed collaterals breaks down as follows: Advance deposits for leased buildings 1,570,990 117,798 1,570,991 117,799 Items in transit 21-4 0 0 0 0 2018 2017 Tax stamp 3,019 4,466 3,019 4,466 Rls(m) Rls(m) Consolidated goodwill 21-3 51,103 45,718 0 0 Less than a year from the foreclosure date 10,428,416 1,105,167 Gold and silver 0 0 0 0 One year or two years from the foreclosure date 3,986,573 17,679,032 Payment for new asquisition 2,474,233 2,320,067 2,474,233 2,320,067 Over two years from the foreclosure date 11,317,927 5,269,044 Prepayment for tax and insurance 913,855 924,474 913,855 924,474 25,732,917 24,053,243 Other 3,097,317 570,701 3,089,776 797,516 35,668,279 28,543,129 35,673,223 28,719,886
104 Annual Report 105 21-2-2- The profit (loss) from the sale of foreclosed collaterals has been disclosed in the statement of profit 22-1- This amount represents the difference in settlement time via the Shetab Payment System in Saman and loss under note No. 46. Bank and the CBI (cut-off period). 21-2-3- The amount of Rls. 745 billion of the foreclosed collaterals has insurance coverage and the remainder does not need any insurance taking account of the value for the premises (buildings and goodwill). 23- Customers’ deposits
21-3- Goodwill Group Parent Company Details of goodwill from consolidated statement under note (8-11 of significant accounting policies) are as follows: Note 2018 2017 2018 2017 Rls(m) Rls(m) Rls(m) Rls(m) Group Real persons 2018 2017 Demand deposits and similar deposits 23-1 5,721,951 3,845,821 5,721,951 3,809,960 Rls(m) Rls(m) Savings deposits and similar deposits 23-2 2,903,702 620,481 2,903,702 620,481 Cost at the beginning of the year 70,974 220,704 Other deposits and advance payments 23-3 48,855 52,989 48,855 52,989 Goodwill acquired during the year 13,492 0 8,674,508 4,519,291 8,674,508 4,483,429 Adjusted goodwill from sale of SEP Company 0 (149,730) Legal persons Cost at year-end 84,466 70,974 Demand deposits and similar deposits 23-1 9,148,661 8,472,516 9,085,582 8,496,029 Accumulated depreciation at the beginning of the year (25,256) (91,141) Savings deposits and similar deposits 23-2 5,700,964 1,287,043 5,704,018 1,287,877 Depreciation during the year (8,108) (4,441) Other deposits and advance payments 23-3 2,931,070 2,791,852 2,935,225 2,795,177 Adjustment of accumulated depreciation from sale of SEP Company 0 70,326 Accumulated depreciation at year-end (33,364) (25,256) 17,780,694 12,551,411 17,724,825 12,579,083 Book value 51,103 45,718 26,455,203 17,070,702 26,399,333 17,062,512
21-4- If the balance of items in transit remains in credit, it shall be reflected in the note to other liabilities. 23-1- Demand deposits and similar deposits for natural and legal customers
22- Due to banks and other credit institutions Group Parent Company 2018 2017 2018 2017 Group Parent Company Rls(m) Rls(m) Rls(m) Rls(m) Note 2018 2017 2018 2017 Free-interest deposits in rial 9,030,398 7,513,707 9,069,296 7,530,059 Rls(m) Rls(m) Rls(m) Rls(m) Free-interest deposits in forex 106,913 648,668 106,913 648,668 Central Bank of Iran (CBI) Various bank checks sold 1,126,844 575,373 1,126,844 575,373 Deposits in rial 0 0 0 0 Unclaimed balances in rial 67,290 54,496 67,290 54,496 Term deposits in forex 1,837,145 1,114,096 1,837,145 1,114,096 Unclaimed balances in forex 5,514 4,038 5,514 4,038 Demand deposits in forex 36,713 28,470 36,713 28,470 Interim credit accounts (temporary creditors) in rial 1,604,221 1,102,981 1,502,243 1,074,281 Debt for differences in foreign exchange rates 2,810,340 2,789,781 2,810,340 2,789,781 Interim credit accounts (temporary creditors) in forex 2,448,555 1,881,336 2,448,555 1,881,336 Debt for foreign exchange reserves account 0 0 0 0 Facilities received in rial 0 0 0 0 Drafts drawn on the bank in forex 501,927 553,119 501,927 553,119 Facilities received in forex 0 0 0 0 Unused managed cash 10,313 15,916 10,313 15,916 Debt for differences in foreign exchange rates 0 0 0 0 Less: Other 0 0 0 0 Account for the bank's checks sold (unsettled) (31,362) (31,297) (31,362) (31,297) 4,684,198 3,932,347 4,684,198 3,932,347 14,870,612 12,318,337 14,807,533 12,305,989 Local banks and credit institutions Demand deposits in rial 2,752 341 2,752 341 Demand deposits in forex 571,444 618,466 571,444 618,466 Payment of checks issued by other banks 0 0 0 0 23-2- Savings deposits and similar deposits – for real and legal persons Facilities received in rial 207,506 275,181 0 0 Facilities received in forex 0 0 0 0 Group Parent Company Other 22-1 3,106,991 4,282,305 3,106,991 4,282,305 2018 2017 2018 2017 3,888,694 5,176,293 3,681,187 4,901,112 Foreign banks Rls(m) Rls(m) Rls(m) Rls(m) Demand deposits in rial 648,929 924,135 648,929 924,135 Free-interest deposits in rial 6,396,159 538,628 6,399,213 539,462 Demand deposits in forex 0 0 0 0 Free-interest deposits in forex 2,208,502 1,366,891 2,208,502 1,366,891 Facilities received in forex 0 0 0 0 Savings deposits - overseas branches 0 0 0 0 Debt for current account (overdraft) 0 0 0 0 Free-interest deposits - for young people 0 0 0 0 Other 0 0 0 0 Special unused free-interest deposits 5 2,005 5 2,005 648,929 924,135 648,929 924,135 Personnel savings account 0 0 0 0 9,221,821 10,032,775 9,014,314 9,757,594 Personnel pension fund 0 0 0 0 Savings deposits for housing project 0 0 0 0 The investment deposits received from foreign and local banks in rial and foreign currency are classified like other investment deposits in the 8,604,666 1,907,524 8,607,720 1,908,358 section of investment depositors’ equity with a view to maturities.
106 Annual Report 107 23-3- Other deposits and advance payments 26-1- Provision for income tax The bank’s income taxes for all years before 2015 have been finalized and paid and a summary statement of Group Parent Company taxes paid for the years 2016, 2017 and 2018 is as follows: 2018 2017 2018 2017 Rls(m) Rls(m) Rls(m) Rls(m) Cash deposits for LGs in rial 846,507 532,678 850,662 536,003 2018 2017 Cash deposits for LGs in forex 5,163 5,337 5,163 5,337 Tax Advances received from customers for LCs in rial 429,080 177,537 429,080 177,537 Profit (loss) Taxable Provision Method of tax Fiscal year Tax Tax Provision declared income Finalized 1 balance assessment Advances received from customers for LCs in forex 1,687,788 2,117,903 1,687,788 2,117,903 declared assesed Paid balance Others 11,387 11,386 11,387 11,386 Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) 2,979,925 2,844,841 2,984,080 2,848,166 Under appeal pending at the Tax Dispute 2016 102,751 2,189,705 0 547,426 0 0 0 0 Settlement Board. 24- Dividends payable Under appeal pending at Primary Tax Panel.
2017 84,671 (788,547) 0 0 0 0 0 0 Group Parent Company 2018 1,018,366 0 0 2018 2017 2018 2017 Tax Rls(m) Rls(m) Rls(m) Rls(m) 0 0 prepayments Balance from prior years 62,283 199,704 52,483 157,034 Dividends approved 363,383 (2,972) 0 0 0 0 Dividends paid (399,350) (134,449) (973) (104,551) 26,316 62,283 51,510 52,483 1. It means the amounts paid to the Ministry of Economic Affairs and Finance.
24-1- A summary turnover of the said account in the parent company is follows: 26-2- For the year 2015 no performance tax was levied for the bank. Capital Balance at Dividend paid Balance at 26-2-1- The tax described in paragraphs “b” and “c”, article 17 of the Law for Elimination of Barriers Cash dividend Approved increase March 20, during March 20, per share dividend from accrued to Competitive Production for the year ended March 20, 2017 was assessed for the amount of Rls. 2017 2017-2018 2018 dividends 780,695,083,617/- (as per the tax certificate No. 44432623 of February 24, 2018 which is pending at the Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Initial Tax Dispute Panel versus an appeal lodged by the bank). It means the amounts paid to the Ministry of Prior years 5,181,640 52,483 (973) 0 51,510 Economic Affairs and Finance. Fiscal year ended March 20, 2016 0 0 0 0 0 0 Fiscal year ended March 20, 2017 0 0 0 0 0 0 27- Provisions and other liabilities 5,181,640 52,483 (973) 0 51,510
Group Parent Company 25- Advance payments 2018 2017 2018 2017 Rls(m) Rls(m) Rls(m) Rls(m) Facilities received from National Development Fund 0 0 0 0 Group Notes payable 12,297 49,470 0 0 2018 2017 Rls(m) Rls(m) Debts for term letters of credit in rial 16,685 11,675 16,685 11,675 Advances received 58,454 7,847 Debts for term letters of credit in forex 2,821,381 498,224 2,821,381 498,224 58,454 7,847 Items in transit 0 0 0 0 Provision for expenses payable 3,568,828 2,590,920 3,364,397 2,340,393 Withholding taxes payable 29,281 26,082 7,387 8,690 26- Provision for income tax Interbranch accounts 493,899 460,796 493,899 460,796 Due to persons/entities 668,046 668,046 668,046 668,046 Group Parent Company Sale of real estate in Qeshm 76,049 76,049 76,049 76,049 2018 2017 2018 2017 Other debts 2,376,419 2,164,316 1,021,201 502,984 Rls(m) Rls(m) Rls(m) Rls(m) Interest and fees payable 0 0 0 0 Balance at the beginning of the year 88,841 116,139 0 0 Tax provision for the year 100,396 266,255 0 0 Insurance payable 0 0 0 0 Prior years' tax adjustments 0 0 0 0 Allowance for leave entitlement (unused) 0 0 0 0 Tax paid during the year (43,511) (12,872) 0 0 Membership fee payable to Deposits Guarantee Fund 0 0 0 0 Consolidated adjustments 0 (205,736) 0 0 145,726 163,786 0 0 10,062,885 6,545,579 8,469,046 4,566,858 Tax prepayments 0 0 0 0 Balance at the year end 145,726 163,786 0 0
108 Annual Report 109 ) 29- Investment depositors’ equity 0
Total Rls(m) 28,239 150,917 414,634 ( 537,312
Group Parent Company Note 2018 2017 2018 2017 0 0 0 0 0 Rls(m) Rls(m) Rls(m) Rls(m)
Rls(m) benefits 2017
Provision Term investment deposits for pension Long-term investment deposits 29-1 143,328,095 96,165,886 143,329,906 96,111,594 Short-term investment deposits 29-1 103,179,925 112,518,806 104,384,218 113,709,514 ) Special short-term investment deposits 29-1 2,883,910 1,595,639 2,883,910 1,595,639 0
Rls(m) 28,239 150,917 414,634 ( 537,312
Investment deposits received from banks and credit institutions 29-1 1,619,284 1,510,171 1,619,284 1,510,171 employees' termination Provision for 251,011,214 211,790,502 252,217,318 212,926,918
) Interest payable on term investment deposits 0
Parent Company Long-term investment deposits 29-2 1,778,618 1,296,633 1,778,618 1,299,234 Total Rls(m) 30,296 184,016 537,312 ( 691,031
Short-term investment deposits 29-2 368,629 611,167 368,629 611,167 Special short-term investment deposits 29-2 17,688 15,731 17,688 15,731 Investment deposits received from banks and credit institutions 29-2 0 0 0 0 0 0 0 0 0
Rls(m) 2,164,935 1,923,531 2,164,935 1,926,132 benefits 2018 Provision for pension 253,176,148 213,714,033 254,382,253 214,853,050 ) 0
Rls(m) 30,296 184,016 537,312 29-1- The term investment deposits by a breakdown of rial and foreign currency ( 691,031
employees' termination Provision for ) ) 2018 2017 Rial Forex Total Rial Forex Total Total Rls(m) 34,097 37,674 169,230 466,334 ( ( 563,793
Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Ordinary term investment deposits 80,643,571 25,359,930 106,003,501 99,348,789 15,870,896 115,219,685 Special short-term investment deposits 0 0 0 0 0
Up to three months 2,533,404 0 2,533,404 22,846 0 22,846 Rls(m) benefits 2017 Provision for pension More than three to six months 126,484 0 126,484 1,399,492 0 1,399,492 More than six months to one year 224,022 0 224,022 173,302 0 173,302 ) ) Long-term investment deposits General certificates of deposit 0 0 0 0 0 0 Rls(m) 34,097 37,674 169,230 466,334 ( ( 563,793
employees' termination
Provision for Special certificates of deposit 0 0 0 0 0 0 One-year term 133,286,131 0 133,286,131 79,268,603 0 79,268,603 Group ) Two-year term 3,529 0 3,529 40,331 0 40,331 0
Total Rls(m) 44,577
205,620 Three-year term 1,545 0 1,546 56,310 0 56,310 563,793 ( 724,836
Four-year term 54,496 0 54,496 73,815 0 73,816 Five-year term 9,984,206 0 9,984,206 16,672,534 0 16,672,534 0 0 0 0 0
226,857,389 25,359,930 252,217,318 197,056,022 15,870,896 212,926,918 Rls(m) benefits 2018 Provision for pension The growth in the one-year-term deposits is due to the prohibition of more than one-year-term deposits under the directive No. 93/96593 of July 2, 2014. The balance of over one-year-term deposits is related to prior years’ deposits.
) Under the directive No. 93/96593 of July 2, 2014 and prohibition of more than one-year term deposits, the balances of two-year and three-year terms are related to that group of depositors who have not visited the bank on the maturity dates whereas the bank is not authorized to carry over 0
Rls(m) the balances of their account to the short-term investment accounts. 44,577 205,620 563,793 ( 724,836
employees' termination Provision for Provisions covered for the year Balance at the year-end Consolidated adjustments Balance at the beginning of year Paid during the year 28- Provisions for employees’ termination and pension benefits
110 Annual Report 111 29-1-1- The long-term investment deposits in terms of maturity and interest rate 29-1-3- Turnover of investment deposits in forex
2018 2017 Balance at Balance at Balance at Balance at March Deposits taken Repayment of March March March 10 20, 2017 during the year deposits More than 22 19 to 22 16 to 19 13 to 16 10 to 13 20, 2018 20, 2018 20, 2017 Percentage Total Total Percentage Percentage Percentage Percentage Percentage and less Amount in forex Amount in forex Amount in forex Amount in forex Amount in rial Amount in rial Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Matured 0 5,888 285 836 0 186 7,196 14,130 Long-term deposits 2017 0 15,703 107 812 0 0 16,622 2,497 US Dollar 0 0 0 0 0 0 2018 12,223,512 84,415,284 5,869,524 29,559,949 0 0 132,068,267 76,536,534 Euro 0 0 0 0 0 0 2019 1,110,253 7,058,773 895,781 1,928,607 0 0 10,993,415 18,066,149 UAE Dirham 0 0 0 0 0 0 2020 9,577 85,847 12,504 20,559 0 0 128,488 1,278,170 --- 0 0 0 0 0 0 2021 and onward 0 0 21,504 94,414 0 0 115,918 214,113 Special and ordinary 13,343,342 91,581,495 6,799,705 31,605,177 0 186 143,329,906 96,111,594 short-term deposits March 20, 2017 268,693 16,567,835 7,120,980 72,148,299 0 5,786 96,111,594 US Dollar 104,412,850.04 40,873,584.04 25,742,818.58 119,543,615.50 4,505,599 3,385,065 Euro 306,725,496.14 280,334,736.10 175,112,998.77 411,947,233.47 19,052,148 10,689,690 UAE Dirham 15,967,006.82 1,343,032.17 7,960,955.52 9,349,083.47 95,950 140,941 29-1-2- Turnover of investment deposits in rial UK Pound 815,237.88 31,100.00 237,823.74 608,514.14 31,946 32,765 Australian dollar 718.35 0.00 0.00 718.35 20 18 Balance at Deposits taken Repayment of Balance at Canadian dollar 60,272.57 0.00 2,126.61 58,145.96 1,672 1,462 March 20, 2017 during the year deposits March 20, 2018 Japanese YEN 4,061,772.00 3,015,000.00 1,019,414.55 6,057,357.45 2,158 1,169 Rls(m) Rls(m) Rls(m) Rls(m) Swiss Franc 3,893,100.75 875,534.23 3,889,610.83 879,024.15 34,745 126,452 Long-term deposits Turkish Lira 3,268,000.57 164,648.76 2,210,517.26 1,222,132.07 11,743 29,232 General certificates of deposit 0 0 0 0 Chinese Yuan 1,000.37 0.00 0.00 1,000.37 6 5 Special certificates of deposit 0 0 0 0 Russian Rouble 0.00 3,522,810.04 0.00 3,522,810.04 2,314 0 One-year term 79,340,927 109,871,174 55,925,971 133,286,131 Omani Rial 0.00 4,000.00 0.00 4,000.00 392 0 Two-year term 11,022 0 7,494 3,529 Qatari Rial 0.00 200,000.00 0.00 200,000.00 2,071 0 Three-year term 13,295 0 11,749 1,546 Investment deposits Four-year term 73,816 10,061 29,381 54,496 received from banks 0.00 0.00 0.00 0.00 0 0 Five-year term 16,672,534 53,691 6,742,018 9,984,206 and credit institutions
Ordinary short-term investment deposits 99,302,714 11,788,303 30,447,564 80,643,453 US Dollar 0.00 0.00 0.00 0.00 0 0 Special short-term investment deposits 1,595,639 2,796,160 1,507,890 2,883,910 Euro 42,005,135.93 35,000,000.00 42,000,000.00 35,005,135.93 1,618,953 1,463,921 Investment deposits received from banks 46,074 0 45,956 118 UAE Dirham 13,930.00 0.00 0.00 13,930.00 143 123 and credit institutions UK Pound 1,326.25 0.00 0.00 1,326.25 70 53 197,056,022 124,519,391 94,718,023 226,857,389 Korean WON 0.00 0.00 0.00 0.00 0 0 25,359,930 15,870,896
112 Annual Report 113 29-1-4- The composition of depositors of investment deposits breaks down as follows: 29-2- Interests payable on term investment deposits are as follows:
March 20, 2018 March 20, 2017 Group
Number Amount Number Amount Provisional Difference in Balance at Interest paid Balance at interest during provisional and depositor Rls(m) depositor Rls(m) March 20, 2017 during the year March 20, 2018 the year final interest Deposits in rial Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Legal persons 14,744 40,449,216 373,623 19,047,611 Ordinary short-term deposits 597,193 9,495,786 0 (9,738,535) 354,444 Real persons 2,034,515 186,408,056 2,012,103 177,962,337 Special short-term deposits 15,731 853,687 0 (851,730) 17,688 Investment deposits received from banks and credit 3 117 6 46,074 institutions General certificates of deposit 0 0 0 0 0
2,049,262 226,857,389 2,385,732 197,056,022 Special certificates of deposit 0 0 0 0 0 Deposits in foreign currency One-year term deposits 800,708 19,896,327 0 (20,075,385) 621,650 Legal persons 878 15,443,539 997 8,472,031 Two-years term deposits 452 0 0 (308) 143 Real persons 37,372 8,297,225 48,410 5,934,768 Three-years term deposits 2,130 0 0 (2,012) 118 Investment deposits received from banks and credit Four-years term deposits 1,754 12,268 0 (14,005) 18 3 1,619,164 5 1,464,097 institutions Five-years term deposits 491,589 3,027,017 0 (2,364,520) 1,154,087 38,253 25,359,930 49,412 15,870,896 Investment deposits received from 0 26,407 0 (26,407) 0 2,087,515 252,217,318 2,435,144 212,926,918 banks and credit institutions
Foreign currency deposits 13,974 442,953 0 (440,140) 16,787 1,923,531 33,754,445 0 (33,513,041) 2,164,935
Parent Company
Provisional Difference in Balance at Interest paid Balance at interest during provisional and March 20, 2017 during the year March 20, 2018 the year final interest
Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Ordinary short-term deposits 597,193 9,563,816 0 (9,809,167) 351,843 Special short-term deposits 15,731 853,687 0 (851,730) 17,688 General certificates of deposit 0 0 0 0 0 Special certificates of deposit 0 0 0 0 0 One-year term deposits 800,708 19,896,328 0 (20,075,385) 621,650 Two-years term deposits 451 0 0 (307) 143 Three-years term deposits 2,130 0 0 (2,012) 118 Four-years term deposits 1,754 12,268 0 (14,005) 18 Five-years term deposits 494,191 3,027,017 0 (2,364,520) 1,156,688
Investment deposits received from 0 26,407 0 (26,407) 0 banks and credit institutions
Foreign currency deposits 13,974 442,953 0 (440,140) 16,787 1,926,132 33,822,476 0 (33,583,673) 2,164,935
29-2-1- Considering the provisional surplus interests paid to depositors in proportion to their shares from the profit-sharing incomes as described in the statement of investment deposits performance under the circular No. 94/69383 of June 10, 2015, the procedure for calculating the share of each item of various investment deposits from the difference in provisional and final interests for the reporting fiscal year does not apply.
114 Annual Report 115 30- Share Capital 31- Legal reserve The Bank’s initial capital was the amount of Rls. 200,000/ million (divided into 200 million shares at nominal value of 1000 rials each) which was increased in several stages to the amount of Rls. 8,000 billion (divided into 8,000/million Group Parent Company shares at nominal value of 1,000 rials each) at the end of the fiscal year ended March 20, 2016 as described below: 2018 2017 2018 2017 Rls(m) Rls(m) Rls(m) Rls(m) Date of capital Amount of capital Source of Capital Increase New capital Balance at the beginning of the year 1,578,061 1,595,890 1,536,569 1,523,868 increase increase capital Increase Allocated during the year 154,341 29,040 152,755 12,701 Consolidated adjustments 0 (46,869) 0 0 August 29, 2002 0 0 200,000 Accrued dividends due and cash contribution Balance at the year end 1,732,402 1,578,061 1,689,324 1,536,569 November 27, 2003 10 20,000 220,000 Accrued dividends due and cash contribution October 15, 2004 36.4 80,000 300,000 Cash contribution March 7, 2005 100 300,000 600,000 Accrued dividends due and cash contribution November 16, 2005 25 150,000 750,000 Accrued dividends due and cash contribution 31-1- Subject to the provisions of paragraph A of article 33 of the Monetary and Banking Law and paragraph B of article 58 of the articles of association, the legal reserve in the parent company is equivalent to October 8, 2006 20 150,000 900,000 Accrued dividends due and cash contribution 15% and subject to the provisions of articles 140 and 238 of the Commercial Code Amendment ratified Accrued dividends due, cash contribution and January 12, 2010 100 900,000 1 800,000 on March 14, 1969, the legal reserve in the subsidiaries is 5% which will be deducted from relevant waiver of rights issue distributable profit and then transferred to the legal reserve account. In accordance with the said March 19, 2011 66.7 1,200,000 3,000,000 Accrued dividends due and cash contribution articles, such transfer to the legal reserve account is mandatory until when the balance of legal reserve March 19, 2012 33.3 1,000,000 4,000,000 Shareholders’ cash contribution in the bank reaches the amount of the bank’s capital and in the subsidiaries up to 10% of the same company’s capital and afterwards this process shall remain to be voluntary. The legal reserve will not October 22, 2013 64.7 2,588,000 6,588,000 Assets revaluation reserve be transferable to capital account and will not be distributed among the shareholders unless when the March 10, 2016 21 1,412,000 8,000,000 Cash contribution and retained earnings company is dissolved. The amounts entered in the balance sheet break down as follows:
30-1- The composition of shareholders as at the balance sheet date was as follows: Group 2018 2017 March 20, 2018 March 20, 2017 Rls(m) Rls(m) Number of Percentage of Number of Percentage of Parent campany shares shares shares shares Saman Bank 1,689,324 1,536,569 One percent (Percentage) and more Subsidiary companies Staff Pension Fund of Foulad (Steel) Co. 400,088,117 5.00 400,088,117 5.00 Saman Satellite Communications Co. 7,823 6,663 Staff Pension Fund of Iranian Copper Co. 624,530,308 7.81 624,530,308 7.81 Saman Exchange Co. 25,122 25,122 Mines and Metals Investment Development Co. 323,686,501 4.05 323,686,501 4.05 Saman Brokerage Co. 2,388 2,068 Mohammad Zarrabieh 315,266,280 3.94 315,266,280 3.94 Saman Processing (Pardazeshgaran) 2,725 2,725 Havva Chaie Dekhoie 214,211,112 2.68 214,307,862 2.68 Iranian Hafez Saman Credit Bureau and Scoring Co. 4,157 4,157 Saman Investment Development Co. 484,163,824 6.05 239,999,995 3.00 Atiyeh Andishan Sepehr Shargh 481 481 Vali Zarrabieh 201,660,057 2.52 201,660,057 2.52 Atiyeh Andishan Sepehr Mehr 191 1 Seyyed Mehdi Ghafouri 181,316,669 2.27 181,316,669 2.27 Tondar Nour 191 191 Seyyed Ahmad Akhavan Dastmalchi 166,800,291 2.09 166,800,291 2.09 Consolidated adjustments 0 84 Ahmad Reza Zarrabieh 128,349,619 1.60 128,349,619 1.60 1,732,402 1,578,061 Mostafa Tavakkol Harandi 118,236,159 1.48 118,236,159 1.48 Iran Pump Manufacturing Industries 147,330,232 1.84 147,330,232 1.84 Iran-Gharb Co. (Private joint stock) 79,853,088 1.00 79,853,088 1.00 32- Assets revaluation reserve Others Legal persons (65 shareholders) 1,149,338,425 14.37 1,363,312,198 17.04 2018 2017 Natural persons (1,923 shareholders) 3,465,169,318 43.31 3,495,262,624 43.69 Transferred, Assets Assets Assets 8,000,000,000 100 8,000,000,000 100 amortized and revaluation revaluation revaluation retired/Capital amount balance balance increase
Rls(m) Rls(m) Rls(m) Rls(m) March 20, 2011 2,588,675 2,588,000 675 675 March 20, 2017 1,506,473 0 1,506,473 1,506,473 March 20, 2018 0 (892,177) (892,177) 0 4,095,148 1,695,823 614,971 1,507,148
116 Annual Report 117 33- Minority interest 0 0
Total 4,672 Rls(m)
86,643 23,526
121,819 818,853 251,264 515,962 910,190 553,145
1,909,648
17,174,688 22,370,409
2018 2017 Rls(m) Rls(m) Share of capital 123,675 129,800
0 0 0 0 0 0 0 0 0 Share of legal reserve 10,378 9,565 0
Forex Rls(m) 30,269 35,824 16,660 82,753
Share of retained earnings 33,251 45,615
167,304 184,980 (Non-profit-sharing) 0 0
Total 4,672 Rls(m)
86,643 23,526
121,819 818,853 251,264 485,693 910,190 536,485
1,909,648
17,138,864 34- Incomes from loans granted and placements in other banks and 22,287,657
debt securities
2017 0 0 0 0 0 0 0 0 0
Rial
Group Non- Rls(m) 80,751 76,428
121,819 251,264 530,262
2018 2017 profit-sharing
Non-profit Non-profit Note Profit-sharing Total Profit-sharing Total -sharing -sharing 0 0 0 0
Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) 4,672 Rls(m)
86,643 23,526
738,102 409,264 910,190 536,485
1,909,648
17,138,864 21,757,394
Income earned from loans granted 34-1 17,876,457 321,711 18,198,168 21,757,394 613,015 22,370,409 Profit-sharing Income earned from placements 34-2 1,073,525 300,130 1,373,655 1,581,737 266,863 1,848,600 in other banks and debt ecurities Group 0 0 0
Total incomes earned from loans Total Rls(m) 76,897 10,818 69,407 32,908
990,873 776,360 464,568
1,183,903 2,200,492
granted and placements in other
18,949,982 621,841 19,571,823 23,339,131 879,878 24,219,009 12,391,942 18,198,168
banks
0 0 0 0 0 0 0 0 0 0
106
Forex Parent Company 5,018 Rls(m)
57,017 62,141
2018 2017 (Non-profit-sharing) Non-profit Non-profit Note Profit-sharing Total Profit-sharing Total -sharing -sharing 0 0 Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) 0
Total Rls(m) 76,897 10,818 69,407 32,908
990,873 776,360 459,550
1,183,903 Income earned from loans granted 34-1 17,902,177 321,712 18,223,889 21,806,816 613,015 22,419,831 2,143,475
12,391,836 18,136,027
Income earned from placements 34-2 1,073,525 282,466 1,355,991 1,581,737 252,634 1,834,371 in other banks and debt ecurities
Total incomes earned from loans 0 0 0 0 0 0 0 0 0 2018
granted and placements in other 18,975,702 604,177 19,579,880 23,388,553 865,649 24,254,202 Rial Rls(m) 76,897 89,246 10,818 82,609
259,570
banks Non-profit-sharing 0 0 0 0 0
Rls(m) 69,407 32,908
990,873 776,360 459,550
1,094,657 2,060,866
12,391,836 17,876,457
Profit-sharing 34-1- Incomes earned from loans granted (Loan interest) Late payment penalty for debtors of LCs Sales by instalments Late payment penalty for LGs paid Jealeh (service contract) Other Hire purchase contracts Muzaraba (trade contracts) Civil partnership Salaf (future contracts) Factoring Murabaha Estesna'a Late payment penalty
118 Annual Report 119 0 0
Total 4,672 Total
Rls(m) Total 6,063 23,526 86,643 6,063
Rls(m) 251,264
121,819 553,145 910,190 515,962 818,853 Rls(m)
203,304 226,649 203,304 226,649 1,909,648
17,224,110 1,412,584 1,398,355 22,419,831 1,848,600 1,834,371
0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0
Forex 16,660 Rls(m) 35,824 30,269 82,753 Forex Forex
Rls(m)
25,985 Rls(m) 25,985 25,985 25,985
-sharing) -sharing) -sharing) (Non-profit (Non-profit (Non-profit 0 0
Total 4,672 Total
Rls(m) Total 6,063 23,526 86,643 6,063
Rls(m) 251,264
121,819 536,485 910,190 485,693 818,853 Rls(m)
2017
203,304 226,649 2017 203,304 226,649 1,909,648
17,188,286 1,386,599 1,372,370 22,337,079 1,822,615 1,808,386
0 0 0 0 0 0 0 0 0
0 0 0 0 0
Rial 2017
Rial Rial Rls(m) 76,428 80,751 251,264 121,819
Rls(m) 530,262 Rls(m) -sharing 14,229
226,649 226,649
226,649 -sharing 240,878
Non-profit -sharing
Non-profit Non-profit 0 0 0 0
0
0
4,672
Rls(m) 23,526 86,643 6,063
536,485 910,190 409,264 738,102 Rls(m)
6,063
203,304
Rls(m) 1,909,648
203,304 17,188,286 1,372,370 21,806,816 1,581,737
1,372,370 1,581,737
Profit-sharing Profit-sharing Profit-sharing Group Parent Company 0 0 0 Parent Company
Total 10,818 76,897 Rls(m) Total 32,909 69,407
464,568 776,361 990,873 Rls(m) 16,847 31,304 Total
251,024 Rls(m) 16,847 31,304 2,201,006 1,183,903
251,024 12,417,147 1,056,816 18,223,889 1,355,991
1,074,479 1,373,655
0 0 0 0 0 0 0 0 0 0
0 0 0 106
0 0 0
5,017 Forex
Rls(m) 57,018 62,142 Forex
Rls(m) 31,442 31,442 Forex
-sharing) Rls(m) 31,442 31,442
-sharing)
(Non-profit -sharing) (Non-profit (Non-profit 0 0 0
Total 10,818 76,897 Total Rls(m) 32,909 69,407
459,551 776,361 990,873 Rls(m) 16,847 31,304 2018 Total
251,024 Rls(m) 16,847 31,304 2018 2,143,988 1,183,903
251,024 12,417,041 1,025,374 18,161,747 1,324,549
1,043,037 1,342,212
0 0 0 0 0 0 0 0 0
0 0 0 2018
Rial 0 0
Rial 10,818 76,897 Rls(m) 82,609 89,246 Rial
Rls(m) 259,570 -sharing
251,024 251,024 Rls(m) 17,663 -sharing
Non-profit
251,024 268,687 -sharing
Non-profit
Non-profit 0 0 0 0 0
0
0
Rls(m) 32,909 69,407
459,551 776,361 990,873 Rls(m) 16,847 31,304
Rls(m) 16,847 31,304 2,061,379 1,094,657
12,417,041 1,025,374 17,902,177 1,073,525
1,025,374 1,073,525
Profit-sharing Profit-sharing Profit-sharing 34-2- Income from placements in other banks and debt securities Other Late payment penalty for LGs paid Late payment penalty for debtors of LCs Late payment penalty Estesna'a Murabaha Factoring Salaf (future contracts) Civil partnership Muzaraba (trade contracts) Hire purchase contracts Jealeh (service contract) Sales by instalments Earnings from fixed-income funds Interest on certificates of deposit, participation bonds and other debt securities Interest on term deposits placed with other banks Interest on statutory deposit (share of depositors depositors of (share deposit statutory on Interest and the bank) Earnings from fixed-income funds Interest on certificates of deposit, participation bonds and other debt securities Interest on term deposits placed with other banks Interest on statutory deposit (share of depositors depositors of (share deposit statutory on Interest and the bank)
120 Annual Report 121 ) 35-1- Dividends from companies and units of mutual funds in the parent company break down as follows: Total Rls(m) 43,614 (
3,731,568 5,077,868 1,346,300 5,034,254 2018 2017
Forex Forex Rial Rial (Non-profit Total (Non-profit Total (profit-sharing) (profit-sharing) -sharing) -sharing) 0 0 0 0 0
Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) 2017 Forex Non- profit sharing Satellite Communications Group 19,232 0 19,232 32,693 0 32,693 Saman Exchange Co. 240,927 0 240,927 212,215 0 212,215 )
Saman Insurance (5,501) 0 (5,501) 62,346 0 62,346 Rial Rls(m) 43,614 Saman Brokerage Co. 5,765 0 5,765 4,800 0 4,800 (
3,731,568 5,077,868 1,346,300 5,034,254
(Profit sharing) Central Securities Depository 1,053 0 1,053 829 0 829 and Settlement Co. ) Iran Investment Co. 12,040 0 12,040 0 0 0 Parent Company Total Rls(m) 33,432 Iran Credit Rating Co. 5,458 0 5,458 3,211 0 3,211 (
6,611,663 1,226,918 1,260,350 7,838,581
Stock Exchange Co. 44 0 44 140 0 140
Iranian Credit Bureau and Scoring Co. 16,833 0 16,833 34,703 0 34,703 0 0 0 0 0
Saman Processing (Pardazeshgaran) 0 0 0 1,000 0 1,000 Forex Rls(m) -sharing) 2018
(Non-profit Sepehr Shargh Atieh Andishan Co. 160,752 0 160,752 2,500 0 2,500 Iran Energy Exchange 685 0 685 457 0 457
) Aftab Tejarat Saman Co. 1,440 0 1,440 750 0 750
Middle East Bank 11,306 0 11,306 8,925 0 8,925 Rial Rls(m) 33,432 (
6,611,663 1,226,918 1,260,350 7,838,581
Shaparak Electronic Payment Co. 9,368 0 9,368 0 0 0
(Profit sharing) Kardan Investment Bank 396,876 0 396,876 427,374 0 427,374
) Iran Fanavar Pars Investment Co. 12,342 0 12,342 9,000 0 9,000
Total Hamedan Glass Works 8,467 0 8,467 0 0 0 Rls(m) 33,573 167,599 (
2,266,306 2,098,707 2,232,732
Iran Pump Manufacturing Co. 1,367 0 1,367 0 0 0
Dividends from long-term investments 898,453 0 898,453 800,942 0 800,942
0 0 0 0 0 Saman Electronic Payment Co. 328,266 0 328,266 481,477 0 481,477
Forex Rls(m) -sharing)
2017 Iran Khodro 47 0 47 31 0 31 (Non-profit Shazand Petrochemical Co. 0 0 0 68 0 68 Tractor Manufacturing Co. 0 0 0 803 0 803 )
Shomal Drilling Co. 152 0 152 3,065 0 3,065 Rial Rls(m) 33,573 167,599 (
2,266,306 2,098,707 Tooka Transport Co. 908 0 908 4,614 0 4,614 2,232,732
(Profit sharing) Rayan Saipa 0 0 0 28 0 28 Group ) Iran Khodro Investment Co. 35 0 35 0 0 0 Isfahan Mubarakeh Steel Co. 1,446 0 1,446 4,003 0 4,003 Total Rls(m) 22,886 802,908 825,795 (
6,612,186 7,415,095
Bahman Group 2,984 0 2,984 2,365 0 2,365
Mapna Group 1,180 0 1,180 1,844 0 1,844
Iranian Leasing Co. 4,727 0 4,727 5,796 0 5,796 0 0 0 0 0
Forex Rls(m) Passargad Bank 0 0 0 2,985 0 2,985 -sharing) 2018 (Non-profit Azarab 0 0 0 74 0 74 Iran Construction Investment Co. 0 0 0 624 0 624 ) Tooka Foulad Investment Co. 6,033 0 6,033 6,347 0 6,347 Rial Rls(m) 22,886 802,908 825,795 ( Gharb Cement Co. 0 0 0 3 0 3
6,612,186 7,415,095
(Profit sharing) Sahand Tire 0 0 0 628 0 628 Iran Khak Chini 0 0 0 8 0 8 Iran Amlah Mining Co. 0 0 0 8 0 8
Khorasan Petrochemical Co. 0 0 0 5 0 5 Takin Co. 0 0 0 32 0 32 Khorasan Pegah 0 0 0 31 0 31 Omid Investment Co. 0 0 0 2,172 0 2,172 Profit (loss) realized on investments of shares from Dividends Net profit (loss) from investments Total profit (loss) realized (loss) profit Total on investments Profit (loss) from increase (decrease) in investments value Net profit (loss) from increase (decrease) in investments value companies and mutual funds Profit (loss) from sales of companies' shares and mutual funds 35- Net profit (loss) from investments
122 Annual Report 123 2018 2017 35-2- Profit (loss) from sales of companies’ shares and units of mutual funds in the parent company: Forex Forex Rial Rial (Non-profit Total (Non-profit Total (profit-sharing) (profit-sharing) 2018 2017 -sharing) -sharing) Number of Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Net sale value Book value Profit (loss) Profit (loss) shares Kharazmi Investment Co. 0 0 0 10,440 0 10,440 Profit (loss) from sales of companies' shares (Rial) (profit-sharing) Share Rls(m) Rls(m) Rls(m) Rls(m) Iran Telecommunication 2 0 2 923 0 923 Iranian National Copper Industries 6,200,000 16,568 15,168 1,400 0 Hamkaran System 0 0 0 15 0 15 Mines and Metals Investment Development Co. 3,646,536 6,479 6,700 (221) (5,211) Tolid Darou Pharmaceutical Co. 0 0 0 7 0 7 Asr Novin Data Investment Development 3,662 17 10 7 0 Parsian E-Commerce 0 0 0 5 0 5 Isfahan Mubarakeh Steel Co. 9,600,000 21,288 13,876 7,412 5,457 Tooka Rail 4,221 0 4,221 5,999 0 5,999 Iran Construction Investment Co. 8,911,790 23,832 33,256 (9,424) (1,070) Iran Kish Credit Card 0 0 0 18 0 18 Iran Telecommunication Co. 4,899 9 12 (3) (725) Mapna Power Generation - Asalouyeh 0 0 0 9 0 9 Iran Telecommunication Co. 0 0 0 0 (3) Pakshoo Industrial Group 0 0 0 24 0 24 Transfo 0 0 0 0 (17) Ghasem Iran 0 0 0 10 0 10 Karafarin Bank 0 0 0 0 (3) Damavand Power Generation 0 0 0 24 0 24 Tejarat Bank 0 0 0 0 (1,185) Mobin Petrochemical Co. 0 0 0 300 0 300 Shomal Drilling Co. 633,000 1,137 3,349 (2,212) (15,403) Tooka Refractory Industry 0 0 0 285 0 285 Rayan Saipa Leasing Co. 0 0 0 0 480 Fajr Petrochemical Co. 0 0 0 516 0 516 Mapna Group 2,456,044 16,758 19,729 (2,971) 0 Gole Gohar 7,020,598 24,855 23,094 1,761 0 Sobhan Oncology 0 0 0 10 0 10 Azarab 0 0 0 0 (3,497) Iran Transfo 0 0 0 38 0 38 Iran Khodro 3,154,455 9,089 10,292 (1,203) 2,254 Karafarin Bank 0 0 0 7 0 7 Saipa 0 0 0 0 (467) Oil Industrial Development Co. 84 0 84 600 0 600 Bank Mellat 6,852,952 6,883 13,448 (6,565) (3,971) Sina Bank 0 0 0 3,374 0 3,374 Shahed Investment Co. 28,593,819 44,452 54,456 (10,004) 165 Mellat Insurance 0 0 0 874 0 874 Iranian Leasing Co. 0 0 0 0 (1,027) Piazar Agro-Industry Co. 0 0 0 76 0 76 Sepah Investment Co. 0 0 0 0 (19,047) Alhavi Pharmaceutical Co. 84 0 84 26 0 26 Informatic Services Co. 144,757 3,271 2,703 568 36 Parsian Bank 0 0 0 3 0 3 Sina Bank 19,277,199 19,356 33,304 (13,948) 0 Middle East Tide Water 0 0 0 15 0 15 Passargad Bank 0 0 0 0 (28,993) A.S.P 0 0 0 19 0 19 Tehran Housing Investment Co. 0 0 0 0 (36) Sina Port and Marine Industry 0 0 0 15 0 15 Tehran Housing Investment Co. 0 0 0 0 (182) Development Co. Isfahan Mubarakeh SteelMill 0 0 0 0 5 Ansar Bank 1 0 1 6 0 6 Tooka Rail 15,186,128 25,986 39,828 (13,842) (560) Shahed Civil and Development Co. 0 0 0 12 0 12 Iran Kish Credit Card 0 0 0 0 (11) Hekmat Bank 0 0 0 3 0 3 Khuzestan Steel Co. 560,000 2,425 2,242 183 275 Other 0 0 0 1 0 1 Omid Investment Co. 9,921,433 22,427 22,058 369 (2,378) Dividend from short-term investments 350,170 0 350,170 540,658 0 540,658 Alborz Insurance Co. 0 0 0 0 (57) Saman Yekom Mutual Fund 11,170 0 11,170 1,170 0 1,170 Tooka Foolad Investment Co. 27,684,210 25,626 33,592 (7,966) 0 Aghigh Mutual Fund 0 0 0 2,559 0 2,559 Tooka Foolad Investment Co. 0 0 0 0 (44) Agah Mutual Fund 556 0 556 965 0 965 Tehran Oil Refinery 300,000 1,260 1,159 101 0 Profit from units of mutual funds 11,725 0 11,725 4,696 0 4,696 Bahman Group 29,428,007 31,903 35,268 (3,365) 3,102 Dividends from companies' shares 1,260,350 0 1,260,350 1,346,300 0 1,346,300 Sahand Tire 0 0 0 0 (642) and units of mutual funds Kharazmi Investment Co. 29,999,998 27,016 42,158 (15,142) (5,800) Taamin Oil, Gas and Petrochemical Investment Co. 4,294,904 6,561 6,142 419 0 Shazand Petrochemical Co. 0 0 0 0 (69) Tooka Transport Co. 7,124,175 12,401 15,823 (3,422) 4,724 Tooka Transport Co. 0 0 0 0 27 Iran Khodro Investment Development 500,000 1,529 2,389 (860) 1,751 Mobin Petrochemical Co. 0 0 0 0 (261) Tractor Manufacturing Co. 0 0 0 0 50 Fajr Petrochemical Co. 0 0 0 0 114
124 Annual Report 125 2018 2017 35-3- Profit (loss) from increase (decrease) in investments value: Number of Net sale Book Profit (loss) Profit (loss) shares value value 2018 2017 Profit (loss) from sales of companies' shares (Rial) (profit-sharing) Share Rls(m) Rls(m) Rls(m) Rls(m) Number of shares/ Net sale Profit Profit Tooka Refractory Industries 0 0 0 0 229 Book value Investment value (loss) (loss) Piazar Agro-Industry Co. 0 0 0 0 5,760 units Shahed Civil and Development Co 0 0 0 0 (56) Profit (loss) from sales of companies' shares (Rial) (profit-sharing) Share Rls(m) Rls(m) Rls(m) Rls(m) Damavand Power Generation Co. 0 0 0 0 (41) Mines and Metals Investment Development 8,392,912 14,354 13,903 (451) 0 Bahman Investment Co. 0 0 0 0 667 Mines and Metals Investment - rights issue 358,388 255 255 0 0 Isfahan Mubarakeh Steel Co. 10,956,434 18,021 31,197 13,176 2,880 Mellat Insurance 0 0 0 0 1,910 Iran Construction Investment Co. 0 0 0 0 (11,938) Hormozgan Jonoob Steel Co. 0 0 0 0 245 Iran Telecommunication Co. 0 0 0 0 (1) Pars Paper Industry Group 0 0 0 0 18 Bank Sina 0 0 0 0 (13,882) Iran Mining Co. 0 0 0 0 (10) Shomal Drilling Co. 1,538,445 8,140 2,558 (5,582) (4,262) Iran Chinaware Industry 0 0 0 0 (2) Mapna Group 4,921,706 39,536 33,104 (6,432) (3,756) Gharb Cement Co. 0 0 0 0 (3) Iran Khodro 0 0 0 0 (2,156) Bank Mellat 0 0 0 0 (5,953) Tolid Darou 0 0 0 0 (7) Iranian Leasing Co. 1,029,258 1,960 1,582 (378) (10,983) Khorasan Petrochemical Co. 0 0 0 0 (5) Bank Saderat 11,600,000 12,885 6,762 (6,123) (2,495) Saipa Azin 0 0 0 0 (25) Tooka Rail 4,000,000 10,491 6,702 (3,789) (10,157) Parsian Electronic Trading 0 0 0 0 (3) Tooka Foolad Investment Co. 22,588,289 27,409 20,545 (6,864) (6,448) Khorasan Pegah Pasteurized Milk 0 0 0 0 (22) Tooka Foolad Investment Co. - rights issue 0 0 0 0 (1,111) Bahman Group 0 0 0 0 (9,013) Khorasan Pegah Pasteurized Milk - rights issue 0 0 0 0 (60) Kharazmi Investment Co. 2 0 0 0 (18,286) Hamkaran System 0 0 0 0 (22) Tooka Transport 1,954,536 4,341 3,515 (826) 5,562 Ghasem Iran 0 0 0 0 (32) Iran Khodro Investment Development 0 0 0 0 (643) Pakshoo 0 0 0 0 (24) Middle East Life Insurance 200,000 100 106 6 (1) TakinCo. Corrosion Control 2,000,000 21,686 21,930 (244) (23) Oil Industry 0 0 0 0 (722) Oil Industry Investment Co. 1,000,000 1,726 2,505 (779) (1,468) Shiraz Petrochemical - Urea Future Bond 0 0 0 0 2,122 Bank Ansar 5,703 13 12 (1) (3) Tecnotar 0 0 0 0 (1) Alhavi Pharmaceutical Co. 1,277,010 6,205 4,440 (1,765) (840) Mellat Leasing Co. 0 0 0 0 88 Talise Livestock Breeding 0 0 0 0 45 Shiraz Petrochemical - Urea Future Bond 2,000 17,243 14,037 3,206 0 Informatic Services Co. 0 0 0 0 21 Sina Port Marine Services 0 0 0 0 (15) A.S.P 0 0 0 0 (195) Middle East Tide Water 0 0 0 0 (12) Plastiran 0 0 0 0 (315) Iranian Capital Trade Development 0 0 0 0 9 Sarcheshmeh Copper - rights issue 240,000 240 391 151 0 Sarcheshmeh Copper 7,585,499 42,906 40,608 (2,298) 0 Parsian Bank 0 0 0 0 (4) Fars Civil Development 7,994,672 20,165 16,434 (3,731) 0 Eghtesad Novin Bank 0 0 0 0 (1) Kharazmi IT Development 448,756 2,024 1,398 (626) 0 Ghadir Investment Co. 1,360,706 1,597 1,886 (289) 0 Takin Co. 1,540,701 16,887 16,249 (638) 0 Ansar Bank 0 0 0 0 (2) Gole Gohar 1,979,402 5,756 6,395 639 0 Ansar Bank - rights issue 778 1 1 0 0 Isfahan Steel Co. 5,000,000 4,705 4,157 (548) 0 Taamin Oil, Gas and Petrochemical Co. 8,768,825 12,541 13,573 1,032 0 Hekmat Iranian Bank 0 0 0 0 (407) Rail Seyr Kowsar 3,886,582 10,753 9,251 (1,502) 0 Ayandeh Bank 0 0 0 0 (3) Mapna Asalouye Power 1,826,480 25,997 22,244 (3,753) 0 Processing Data Co. 0 0 0 0 2,235 Kayson 21,250,000 39,747 32,893 (6,854) 0 Tooka Steel Dye Co. 0 0 0 0 171 Kayson - rights issue 5,000,000 4,352 3,029 (1,323) 0 Talise 189,860 1,895 1,630 265 24 Ghadir Investment Co. 8,639,294 11,978 10,175 (1,803) 0 Sobhan Oncology 0 0 0 0 26 Bojnord Cement Co. 3,825,890 18,426 18,429 3 0 Kerman Civil Development 44,781 210 231 21 0 A.S.P. 932,047 731 1,122 (391) 0 Cultural Heritage Investment 10,000,000 19,689 19,280 (409) 0 Kerman Civil Development Co. 3,100,000 16,116 14,504 1,612 0 Saman Kish Electronic Payment 501,695,158 593,097 5,704,412 5,111,315 0 Jam Petrochemical Co. 1,000,000 10,081 9,444 637 0 Middle East Bank 146,379,400 207,217 292,459 85,242 0 Saman Insurance 14,900,000 54,592 11,529 43,063 0 Saman Insurance 230,043,110 178,000 794,269 616,269 0 Electronic Payment Co. 39,600,000 0 1,584 (1,584) 3,794,653 Kardan Investment Bank 646,666,400 649,207 1,396,498 747,291 0 Adjustment of impairment loss reserves from previous year 0 0 0 92,214 48,916 285,583,957 476,796 510,228 (33,432) 3,731,568 1,681,637,633 2,007,607 8,527,056 6,611,663 (43,614) Profit (loss) from sales of mutual funds (Rial) (profit-sharing) 0 0 0 0 0 Profit (loss) from increase (decrease) 0 0 0 0 0 Profit (loss) from sales of companies' share (Forex) (non-profit sharing) 0 0 0 0 0 in investments value (Forex) (non-profit sharing) Profit (loss) from sales of mutual funds (Forex) (non-profit sharing) 0 0 0 0 0 0 0 0 0 0 285,583,957 476,796 510,228 (33,432) 3,731,568 1,681,637,633 2,007,607 8,527,056 6,611,663 (43,614)
126 Annual Report 127 36- Bank’s share from profit-sharing incomes 36-3- Interest on statutory deposit of investment deposits are as follows:
Bank’s share of sources from profit-sharing incomes is calculated as follows: 2018 2017 36-1- Bank’s share from profit-sharing incomes Rls(m) Rls(m) Average statutory deposit of investment deposits 23,430,897 21,432,804 Interest on statutory deposit 232,707 215,923 Bank's share of sources to Bank’s share of sources from Fiscal year Profit-sharing incomes total uses ratio (36-2) profit-sharing incomes
Percentage Rls(m) Rls(m) 2017 0.00 28,422,807 0 37- Deposits management fee 2018 0.00 26,814,282 0 The bank’s management fee for the fiscal year 2017-2018 was calculated at the rate of 3% on the basis of the minutes dated September 25, 2016. Should the shared uses be less than the total free resources of investment deposits, the bank’s resources and accordingly its share from the profit-sharing incomes will drop to nil. Management fee = Free rate x Average shared uses 3,931,454 = %3 x 131,048,466 36-2- Distribution of shared resources and uses between the depositors and 37-1- Stated management fee (MF) the bank
Stated MF Calculated MF 2018 2017 Average Rate Percentage Amounts in Rls(m) Rate Percentage Amounts in Rls(m) Rls(m) Rls(m) Ordinary short-term deposits 3 2,138,283.00 2.18 1,556,248.73 Average shared uses (36-2-1) 131,048,466 130,350,703 52-week average Special short-term deposits 3 128,264.89 2.18 93,351.57 Average balance of investment deposits (36-2-2) 203,491,258 182,978,252 52-week average Less: Statutory deposit from investment deposits (23,430,897) (21,432,804) 52-week average General certificates of deposit 3 0 2.18 0 Free resources of investment deposits 180,060,361 161,545,448 One-year term 3 2,770,815.54 2.18 2,016,607.79 Bank’s share of sources out of shared uses Two-year term 3 900.80 2.18 655.60 (49,011,895) (31,194,745) (Surplus free resources of investment deposits) Three-year term 3 1,270.09 2.18 924.38 Four-year term 3 1,742.72 2.18 1,268.36 The bank’s share of resources out of the shared uses means the shared uses deducted from the free resources of investment deposits. Should the total free resources of investment deposits exceed the shared uses, the surplus thereof will be named the surplus free resources of investment Five-year term 3 357,382.55 2.18 260,104.08 deposits. Investment deposits received from banks 3 3,151.23 2.18 2,293.47 and credit institutions 36-2-1- Average shared uses 5,401,811 3,931,454
2018 2017 Items of shared uses Amount (average) Amount (average) Rls(m) Rls(m) 38- Compensation of expenses related to depositors' free resource Net uses related to loans 122,899,779 119,870,958 surplus to shared uses Net uses related to investment deposits placed with other banks 4,954,268 6,658,341 Pursuant to the directive No. 94/69383 of June 10, 2015 the expenses for depositors’ surplus resources are Net uses related to investment in shares and other securities 3,194,419 3,821,404 calculated as follows: Total uses related to profit-sharing operations 131,048,466 130,350,703
Profit-sharing incomes 36-2-2- Average investment deposits Surplus free resources of investment deposits to shared uses x Average shared uses March 20, 2018 March 20, 2017 26,814,282 Items of shared uses Amount (average) Amount (average) 49,011,895 x = 10,028,495 131,048,466 Rls(m) Rls(m) Ordinary short-term deposits 80,779,211 96,139,448 Special short-term deposits 4,824,543 758,158 General certificates of deposit 0 0 One-year term 104,201,053 68,536,214 Two-year term 33,863 73,495 Three-year term 47,752 66,514 Four-year term 65,522 77,186 Five-year term 13,434,273 16,287,017 Investment deposits received from banks and credit institutions 105,041 1,040,222 Average investment deposits 203,491,258 182,978,252
128 Annual Report 129 39- Provisional interests paid on investment deposits 41- Fee and commission incomes
Group Parent Company Group Parent Company 2018 2017 2018 2017 Note 2018 2017 2018 2017 Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Interest on ordinary short-term deposits 9,495,786 13,443,317 9,563,816 13,504,959 Fees for LCs opened 78,855 47,214 78,855 47,214 Interest on special short-term deposits 853,687 130,924 853,687 130,924 Fees for Shetab Payment System 597,747 556,331 597,747 556,331 Long-term deposits Fees for LGs issued 137,234 73,724 138,629 78,360 One-year term 19,896,327 13,410,159 19,896,327 13,437,522 Credit cards subscription 9,238 3,209 9,238 3,209 Two-year term 0 12,401 0 0 Banking drafts 181,281 144,944 156,840 126,124 Three-year term 0 13,740 0 0 Holders of Shetab Cards 226,339 191,046 226,339 191,046 Four-year term 12,268 15,450 12,268 15,450 Net fees for interest-free (Gharzolhasaneh) 41-1 59,887 23,129 59,887 23,129 transactions Five-year term 3,027,017 4,317,501 3,027,017 4,317,501 Forex transactions 65,496 58,800 65,496 58,800 General certificates of deposit 0 1,222 0 0 Fees for managed funds 0 0 0 0 Investment deposits received from banks and credit 26,407 141,044 26,407 141,044 institutions Processing customer's files 0 0 0 0 Fees received from holders of special 33,311,492 31,485,760 33,379,522 31,547,400 0 0 0 0 certificates of deposits Collaterals valuation 0 0 0 0 Fees for cards issuance 15,016 14,465 15,016 14,465 40- Interest expenses on deposits Fees received for short banking messages (SMS) 79,282 67,706 79,282 67,706 Incomes received for sale of insurance 63,104 60,868 63,104 60,868 Group Parent Company policies Note 2018 2017 2018 2017 Other 150,200 101,934 150,200 101,934 Rls(m) Rls(m) Rls(m) Rls(m) 1,663,679 1,343,368 1,640,633 1,329,184 Interest on investment deposits in rial 40-1 33,311,492 31,485,760 33,379,522 31,547,400 Interest on special certificates of deposit 0 0 0 0 Interest on foreign currency deposits 442,953 400,513 442,953 400,514 41-1- Net fees for free-interest (Gharzolhasaneh)transactions are as follows: 33,754,445 31,886,273 33,822,476 31,947,914 2018 2017 Rls(m) Rls(m) Fees received for interest-free loans 60,703 23,945 40-1- Reconciliation statement of provisional interests paid on investment Fees for prizes on interest-free deposits (816) (816) deposits (in rial) along with interest expenses on investment deposits Net fees for interest-free loans 59,887 23,129
2018 2017 Rls(m) Rls(m) 42- Fee and commission expenses Provisional interest paid on investment deposits (Note 39) 33,379,522 31,547,400
Plus (less): Difference in interest payable to depositors (surplus of interest paid to (235,491) (17,217) depositors - brought from the statement of investment deposits performance) Group Parent Company 2018 2017 2018 2017 Final interest accrued to investment deposits 33,144,030 31,530,183 Rls(m) Rls(m) Rls(m) Rls(m) Plus: Final interest paid to depositors (equivalent to surplus interest paid to depositors) 235,491 17,217 Fees paid to brokers 6,081 121,569 6,081 121,569 Interest on ivestment deposits in rial 33,379,522 31,547,400 Fees paid to CBI - Shaparak System 1,050,834 1,063,987 1,050,834 1,063,987 Fees paid to Shetab Payment System 434,208 420,770 434,207 420,770 Fees paid to Saman Electronic Payment Co. 356,749 12,041 356,749 144,105 Fees paid to Hafez Iranian Credit Scoring Co. 31,762 26,009 72,300 75,961 Other 31,696 16,737 31,696 16,737 1,911,329 1,661,111 1,951,867 1,843,129
130 Annual Report 131 43- Incomes from sales and services rendered 46-1- Profit (loss) from sale of tangible fixed and intangible assets breaks down as follows:
2018 2017 Group Cost Book value Amount sold Profit (loss) Profit (loss) 2018 2017 Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Land 286,354 286,354 514,877 228,524 389,489 Sales and services rendered 90,626,150 57,931,529 Installations 0 0 0 0 0 Return from sales and reductions (in subsidiaries) 0 (112) Buildings 544,012 418,380 978,159 559,778 431,960 90,626,150 57,931,415 Furniture and fixtures 0 0 0 0 0 Motor vehicles 0 0 0 0 0 Assets in process of completion 0 0 0 0 0 43-1- The income earned from sales and services rendered is mainly related to the foreign currency trading Orders and capital prepayments 0 0 0 0 0 (sales) by the Saman Foreign Exchange Company. Capital items in stock 0 0 0 0 0 44- Cost price of sales and services rendered Goodwill for place of business 1,738,482 1,738,482 3,125,870 1,387,389 1,422,552 Royalties 0 0 0 0 0
Group 2,568,847 2,443,216 4,618,906 2,175,690 2,244,000 2018 2017 Rls(m) Rls(m) Cost price of goods and services rendered 90,040,028 56,703,529 46-2- The balance of this account is related to the contracts signed for sale of assets in preceding years as 90,040,028 56,703,529 revoked in the fiscal year 2017-2018 and / or related to the gains earned from installment-based sale of assets in preceding years.
45- Net profit (loss) from foreign currency exchanges and transactions 47- Administrative and general expenses
Group Parent Company Group Parent Company Note 2018 2017 2018 2017 2018 2017 2018 2017 Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Personnel expenses 47-1 2,654,571 2,342,566 2,482,572 2,160,457 Profit (loss) from forex trading (buying & selling) 1,535,408 1,297,131 1,535,073 1,288,354 Administrative expenses 47-2 2,828,218 1,539,508 2,664,066 1,425,596 Profit (Loss) from foreign exchange translation 2,395,482 77,864 2,414,664 96,212 5,482,789 3,882,074 5,146,638 3,586,053 3,930,890 1,374,995 3,949,737 1,384,566
46- Net other incomes and expenses 47-1- The personnel expenses break down as follows: Group Parent Company Group Parent Company 2018 2017 2018 2017 Note 2018 2017 2018 2017 Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Salaries, wages and benefits 2,074,366 1,845,546 1,932,091 1,695,536
Profit (loss) from sale of tangible fixed and Social security insurance - employer's contribution 342,719 291,820 328,915 277,597 46-1 2,176,275 2,243,991 2,175,690 2,244,000 intangible assets Employees' termination and pension benefits 6,841 9,363 0 0 Profit (loss) from sale of foreclosed Business travels and allowances 0 0 37,496 35,829 7,398,403 3,283,866 7,398,403 3,283,507 collaterals Other 230,645 195,837 184,070 151,495 Profit (loss) from sale of prior years' assets 46-2 (325,260) 0 (325,260) 0 2,654,571 2,342,566 2,482,572 2,160,457 Professional (loan processing) fees 299,153 181,129 299,153 181,129 Income from post, Telegraph, 1,559 1,056 1,559 1,056 Telephone and Swift Insurance and loans monitoring 13,272 3,034 13,273 3,035 Others 411,841 424,138 392,272 493,831 9,975,243 6,137,214 9,955,091 6,206,558
132 Annual Report 133 47-2- The administrative expenses break down as follows: 48-1- The specific expenses for doubtful debts incurred for the loans granted and the amounts due are as follows: Group Parent Company 2018 2017 2018 2017 2018 2017 Doubtful debts Doubtful debts Rls(m) Rls(m) Rls(m) Rls(m) Overdue Outstanding Total Total up to 5 years more than 5 years Office rents 368,587 297,302 341,062 294,829 Balance of loans granted and Expenses for advertisement and marketing 212,657 191,704 209,948 185,028 Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) non-current loans at year-end Utilities: water and electricity 107,248 108,982 42,285 40,458 Governmental entities 0 0 0 0 0 0 Transportation charges 20,011 20,640 18,944 19,106 Non-governmental entities/persons 4,499,811 825,883 23,488,325 0 28,814,019 50,990,057 Office supplies and consummables 59,176 59,753 56,321 55,636 Balance of other accounts receivable at year-end 0 0 0 0 0 0 Amounts due from subsidiary and affiliated Gifts, presents and prizes 368 458 0 0 0 0 0 0 0 0 companies (Note 14) Repairs and maintenance of tangible fixed-assets 434,952 225,608 434,110 224,311 Other accounts receivable (Note 15) 0 0 2,654,871 0 2,654,871 2,224,304 Expenses for hosting guests and entertainments 155,614 129,209 154,358 126,750 4,499,811 825,883 26,143,196 0 31,468,890 53,214,361 Training and research 37,092 832 36,699 31,843 Less collaterals value by calculating risk factors Auditing ans consulting fees 241,571 61,756 241,478 61,566 Savings and investment deposits 168,391 7,504 34,775 0 210,670 77,077 Participation bonds and other debt securities Contribution paid to Deposits Guarantee Fund 601,892 0 601,892 0 0 0 0 0 0 0 guaranteed by the government and CBI Bonuses and remuneration for board members 4,226 0 0 0 Participation bonds and other debt securities 0 0 0 0 0 1,600 Purchase of contractual services 0 0 0 0 guaranteed by other banks Attendance bonus for non-executive board members 0 0 0 0 Banking LGs 0 0 0 0 0 0 Communications and telecommunication 75,718 67,011 75,718 67,011 LCs transacted 0 0 30,000 0 30,000 0 Shares listed on the stock exchange 566,767 0 81,684 0 648,451 1,074,815 Insurance premiums 47,726 32,236 47,726 32,236 Real estates 2,678,451 0 15,939,069 0 18,617,520 30,237,964 Automation system 62,594 49,835 62,594 49,835 Machinary 0 51,020 408,243 0 459,263 136,941 Legal and registration processing fees 22,533 23,331 22,533 23,331 3,413,609 58,524 16,493,771 0 19,965,904 31,528,397 Other expenses 376,252 270,850 318,398 213,655 Base balance for calculating specific provision 1,086,202 767,359 9,649,425 0 Base factor for calculating specific 2,828,218 1,539,508 2,664,066 1,425,596 10 20 50 50-100 provision - percentage Specific provision for doubtful debts 108,620 153,472 4,824,713 0 5,086,805 4,586,805 Plus specific provision for renewed and 0 0 0 0 0 0 47-2-1- The said amount is a supplement to the membership fee for the CBI’s Deposits Guarantee Fund for restructured loans 2014-2015 as well as the membership fees of CBI’s Deposits Guarantee Fund for 2015-2016 and 2016-2017 Less Balance of provision for doubtful debts 108,620 153,472 4,324,713 0 4,586,805 4,286,805 which was entered in accounts in 2017-2018. during the year Plus bad loans during the year 0 0 0 0 0 0 Specific provision for doubtful debts, 48- Expenses for doubtful debts 0 0 500,000 0 500,000 300,000 loans grantedcand amounts due
Group Parent Company Note 2018 2017 2018 2017 General expenses for the loans granted and amounts due are as follows: Rls(m) Rls(m) Rls(m) Rls(m) 48-2-
Specific expenses for doubtful debts, 48-1 500,000 304,240 500,000 300,000 2018 2017 loans and claims Rls(m) Rls(m) General expenses for loans and claims 48-2 0 0 0 0 Balance of amounts due from the government 0 0 500,000 304,240 500,000 300,000 Balance of loans granted to governmental entities 0 0 Balance of loans granted to non-governmental entities/persons (Note 11-1) 144,549,153 133,962,716 Balance of interim accounts (temporary debtors) related to loans (Note 15-2) 0 0 Balance of debts for term LCs (Note 21-1) 2,135,039 485,981 Amounts due from subsidiary and affiliated companies (Note 14-2) 2,928,844 2,802,935 Other accounts receivable (Note 15-3) 40,528,550 24,032,205 Less: Balance of loans granted and the amounts for which specific provision has been calculated (31,468,890) (53,214,361) Base balance for calculating general provision 158,672,696 108,069,476 Base factors for calculating general provision - percentage 1.5 1.5 General provision for loans granted and amounts due 1,794,479 1,794,479 Less balance of general provision for loans granted and amounts due at year-end 1,794,479 1,794,479 Plus bad loans during the year 0 0 General provision for loans granted and amounts due 0 0
134 Annual Report 135 49- Financial expenses 51-2- In order to provide a fair profile of the financial position and the results of operations, all relevant comparative items in the comparative financial statements have been amended and restated. For this reason, some of the items so compared may not necessarily correspond with those in the financial Group Parent Company statements presented for the previous fiscal year. 2018 2017 2018 2017 Rls(m) Rls(m) Rls(m) Rls(m) 52- Reconciliation statement of net profit Interest on facilities received from other banks and credit 0 0 0 0 institutions The reconciliation statement of net profit along with the net cash inflow from operating activities breaks down Interest and late payment on facilities received from the CBI 0 1,787 0 1,787 as follows: Financial expenses of debt securities 8,301 108,752 0 0 Group Parent Company Late payment penalty paid 0 0 0 0 2018 2017 2018 2017 Late payment penalty for overdraft from current account 0 0 0 0 with CBI Rls(m) Rls(m) Rls(m) Rls(m) 8,301 110,539 0 1,787 Net profit (loss) 1,421,707 (1,634,719) 1,018,366 84,671 Depreciation/amortization expense 574,516 509,243 524,574 445,209
Net increase (decrease) in provision for employees' 161,042 97,459 153,719 122,678 49-1- The expenses paid for Sukuk bonds were related to prior years’ bonds which were settled in the termination and pension benefits beginning of 2015 (March 21 based on Iranian Calendar). Net increase (decrease) in financial expenses payable 0 0 0 0 Net increase (decrease) in income tax payable 0 (302,958) 0 0 Profit (loss) from sale of tangible fixed 50- Depreciation/amortization expenses (2,175,690) (2,244,000) (2,175,690) (2,244,000) and intangible assets
Group Parent Company Profit (loss) from sale of non-operating real estates (7,398,403) (3,283,866) (7,398,403) (3,283,507) 2018 2017 2018 2017 Net profit (loss) from cash foreign currency translation (2,414,664) (77,864) (2,414,664) (96,212) Rls(m) Rls(m) Rls(m) Rls(m) (9,831,492) (6,936,705) (10,292,100) (4,971,161) Tangible fixed assets depreciation 490,247 405,226 474,477 391,808 Net increase (decrease) in operating liabilities Intangible assets depreciation 53,227 68,655 50,097 53,401 Due to banks and other credit institutions (743,280) (21,921,716) (743,280) (17,284,616) 543,474 473,881 524,574 445,209 Customers' deposits 9,137,191 (4,699,904) 9,336,821 (4,822,566) Debt securities 0 0 0 0 Operating portion of provisions and other debts 5,766,262 4,183,035 3,902,189 298,204 51- Prior years’ adjustments Investment depositors' equity 39,529,204 20,151,159 39,529,204 20,679,254 53,689,377 (2,287,426) 52,024,933 (1,129,724)
Group Parent Company Net (increase) decrease in operating assets Note 2018 2017 2018 2017 Due from banks and other credit institutions (1,589,180) 2,834,781 (1,011,701) 3,157,622 Rls(m) Rls(m) Rls(m) Rls(m) Amounts due from the government 0 0 0 0 Accumulated effects of changes in accounting Loans granted to and amounts due 0 0 0 0 0 0 0 0 standards from governmental entities Loans granted to and amounts due from Adjustment of errors 51-1 (88,373) (56,085) 0 0 (10,086,437) (840,420) (10,086,438) (762,213) non-governmental entities/persons (88,373) (56,085) 0 0 Investment in shares and other securities (12,704,094) (688,340) (10,658,155) 460,774 Due from subsidiaries and affiliates (125,909) (505,135) (125,909) (1,772,412)
51-1- The adjustment of errors includes the following items: Other accounts receivable (16,372,288) (636,431) (16,496,345) (18,211,769) Statutory deposit (4,442,881) (1,904,358) (4,442,881) (1,904,359) Group Parent Company Operating portion of other assets 2,670,433 (10,804,309) 2,620,754 6,413,674
2018 2017 2018 2017 (42,650,356) (12,544,211) (40,200,674) (12,618,683) Rls(m) Rls(m) Rls(m) Rls(m) Net cash inflow (outflow) from operating activities 1,207,528 (21,768,342) 1,532,159 (18,719,568) Prior years' adjusted income tax (47,878) (50,646) 0 0 Adjusted value added tax (VAT) 0 0 0 0 Adjusted withholding tax and prior years' interests 0 0 0 0 Adjusted insurance premiums 0 0 0 0 Adjusted provisions for doubtful debts 0 0 0 0 Adjusted incomes 0 0 0 0 Financial expenses 0 0 0 0 Other expenses (40,494) (5,438) 0 0 (88,373) (56,085) 0 0
136 Annual Report 137 53- Non-cash transactions 0 0 0 0
914 267 711
in rial 68,325 88,654 Rls(m)
426,875 197,784 131,304 320,751 387,345 Amount
1,076,337 2,742,940 1,857,855 5,746,748 The major non-cash transactions during the year break down as follows: 1,553,314 7,300,061
2018 2017 Note Rls(m) Rls(m) 0 0 1.00 Assets acquisition in exchange for loans granted 53-1 8,947,576 3,540,105 0.01 89,013.46 27,821.89 119,564.00 3,321,885.99 3,951,649.02 23,272,657.58 71,828,242.92 59,308,083.80 Forex amount 341,005,396.08 191,806,819.00 193,345,256.21 152,853,220.00
Assets offset for loans granted 53-2 0 0 9,116,395,133.00 Balance at the year end Restructured loans (to settle previous loans) 9,427,069 9,689,174 1 1 6 1 8 1 1 0 2 2 0 1 1
22 13 15 Exchange of assets 53-3 0 316,428 33
Capital increase from dividends accrued to shareholders 0 0 Number Capital increase from assets revaluation reserve 0 0
18,374,645 13,545,707 0 0
33
137 383
3,887 5,829 3,975 1,277 in rial
61,004 78,361 81,072 47,351 15,941 72,380 Rls(m)
119,715 153,321 552,052 Amount
1,051,958 1,124,338 Effects of
exchange rate
during the year 53-1- During the reporting year, the following assets have been acquired: ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Debt amount at Value of acquired Type of customer Amount paid/ Debt balance 61.10 in rial
Type of asset foreclosed the acquisition asset appraised ( Rls(m) Amount 19,812.74 31,912.01 36,640.83
relationship debt remission after foreclosure 3,792,906 241,460.53 121,335.04 886,725.25 163,398.18 535,890.26 176,176.21 693,694.26 ( ( ( 23,376,434 ( ( ( ( ( ( ( ( 2,491,686.88 1,774,475.19 1,053,726.25 4,019,307.05 2,732,732.44 date by expert ( 12,190,304.64 ( ( ( ( ( 27,169,339.85 (
( Rls(m) Rls(m) Rls(m) Rls(m) ) ) ) ) ) ) ) Residential properties Unrelated customer 1,734,434 1,918,682 520,846 581,713 ) ) ) ) ) ) ) ) )
Business/office properties Unrelated customer 6,722,240 6,220,876 5,583,040 388,271 ) Shares Unrelated customer 0 0 0 0 during the year 6,050.55 ( Credited (cancelled) 4,316,500.00 3,813,178.11 7,076,996.32 20,416,462.43 53,875,475.87 18,103,010.43 55,769,618.41 89,587,934.00 Forex amount ( ( ( 149,204,989.27 458,700,180.00 101,685,102.68 263,579,853.51 303,752,087.00 ( ( ( ( Participation bonds Unrelated customer 0 0 0 0 ( ( ( ( ( ( 6,862,793,540.00 1,816,769,391.83 77,669,748,747.00 ( ( ( Factory and equipment Unrelated customer 750,943 658,102 657,141 151,810 ) ) ) Land Unrelated customer 9,508,210 149,916 26,598 10,950,910 ) ) ) ) ) ) ) ) ) ) ) 0 0 0 4 3 1 1 1 9 1 1 2 2 32 10 21 26 ( ( ( ( ( ( ( ( ( ( ( ( ( (
18,715,827 8,947,576 6,787,625 12,072,704 Number 0 0
in rial 94,132 29,920 36,908 Rls(m)
220,367 925,354 924,564 148,828 256,015 Amount
3,320,492 1,219,370 3,479,030 2,393,262 2,221,520 During the fiscal year ended March 20, 2018, this bank did not offset any asset with the loans granted. 1,081,039
53-2- 5,038,873
12,693,213
24,005,141 29,044,014
53-3- During the fiscal year ended March 20, 2018 this bank did not have any exchange of assets. 0 0 during the year 3,841,000.00
15,839,092.43 71,795,972.12 12,439,890.00 88,016,557.45 83,992,284.00 11,028,645.34 Forex amount
63,140,042,287 155,704,902.49 417,798,437.00 249,064,619.36 274,453,784.97 441,405,533.00
6,263,281,007.00 1,594,075,404.68
Opened (increased obligation) 1 0 2 0 0 0 6 0 1 0 1 1 2
21 11 10 24
Number 0 0
839 450
1,610 7,539 in rial
22,085 17,206 15,837 66,955 Rls(m)
186,528 476,744 307,174 279,595 551,866 678,643 Amount 234,968
1,687,979 4,066,082 4,301,050
0 0 95,064.01 50,255.26 Balance at the 4,696,934.00 5,352,161.33 5,663,120.44 4,316,500.00 5,595,650.00
65,328,329.70 16,990,431.22 48,434,152.34 15,199,774.00 Forex amount
599,512,534.00 563,699,383.23 232,708,562.00
23,646,101,593.00 beginning of the year 4 4 5 2 2 1 1 2 2 0 0 2
33 12 11 26 35
Number The statement of obligations pledged by the parent company under letters of credit in foreign foreign in credit of letters under company parent the by pledged obligations of statement The currency breaks down as follows: 54-1-1- Type of 54-1- The obligations under letters of credit (LCs) – in rial and forex currency Chinese Yuan Korean Won Term Euro UAE Dirham Omani Rial Chinese Yuan Indian Rupee Swedish Krona Japanese Yen Swiss Franc Turkish Lira Korean Won Japanese Yen Turkish Lira Omani Rial Demand/call Euro Indian Rupee 54- Off-balance sheet items
138 Annual Report 139 54-1-2- The obligations pledged by the parent company under rial-denominated letters of credit are as follows: 54-4- The managed funds and similar funds consist of the following:
Balance at the Credited (cancelled) 2018 2017 Opened during the year Balance at the year end beginning of the year during the year Rls(m) Rls(m) Type of credit Number Rls(m) Number Rls(m) Number Rls(m) Number Rls(m) Loans granted out of managed funds 1,172,581 1,100,630 Demand/call 1 2,170 0 0 0 0 1 2,170 Unused managed funds 73,347 65,231 Term 7 17,799 13 719,989 (7) (320,201) 13 417,588 Loans granted out of special interest-free deposits 180 180 19,969 719,989 (320,201) 419,758 Special unused interest-free deposits - Gharzolhasaneh 37 2,037 1,246,146 1,168,078
54-2- The obligations under letters of guarantee issued in rial and foreign currency 54-5- The obligations created under letters of credit and letters of guarantee 54-2-1- The statement of obligations pledged by the bank under the letters of guarantee in foreign currency by a breakdown of collateral type breaks down as follows: 2018 2017 2018 2017 Rls(m) Rls(m) Amount in forex Amount in rial Amount in forex Amount in rial Deposits 5,794,517 1,617,002 Rls(m) Rls(m) Participation bonds and other debt securities guaranteed by government and CBI 0 392,066 UK Pound 138,334 7,262 138,334 5,560 Participation bonds and other debt securities guaranteed by other banks 0 4,441 Euro 34,503,662 1,595,760 15,898,916.86 554,093 Banking LGs 699,807 646,555 Canadian Dollar 2,370,000 68,152 2,370,000 57,503 Letters of credit transacted 0 84,265 Chinese Yuan 15,642,623.3 92,964 15,642,623.30 73,552 Shares listed on the stock exchange 17,817 1,250 1,764,138 690,708 Land and buildings 953,216 859,537 Machinery 55,479 5,713,696 Checks and promissary notes 9,705,316 30,876 54-2-2- The obligations pledged by the bank under rial-denominated letters of guarantee are as follows: Other 268,862 49,160 17,495,014 9,398,848 2018 2017 Unseccured obligations 95,334 52,116 Rls(m) Rls(m) 17,590,348 9,450,964 Obligations for LGs issued 8,106,391 4,439,237 8,106,391 4,439,237 55- Capital obligations and contingent liabilities 55-1- There were no material capital obligations as at the balance sheet date. 54-3- Other obligations pledged by the bank break down as follows: 55-2- There were no material contingent liabilities as at the balance sheet date. 2018 2017 Rls(m) Rls(m) 56- Earnings per share (EPS) Obligations for participation bonds and other similar securities guaranteed 0 0 56-1- Basic earnings per shae Obligations for credit cards 1,928,107 1,604,420 Obligations for contracts in forex - Foreign Exchange Reserve Account 0 0 The basic EPS is earned by dividing the dividends belonging to ordinary shareholders by the average weighted number of ordinary shares outstanding with the shareholders. The average weighted number of ordinary Obligations for syndicated contracts 0 0 shares (basic) consists of 8,000,000,000,000 shares. Obligations for commodity loans guaranteed 0 0 Obligations for contracts in rial 18,119,400 15,734,176 56-2- Diluted earnings per share Obligations for contracts with the Management and Planning Organization 0 0 The diluted earnings per share is earned by dividing the dividends belonging to ordinary shareholders by the Obligations for amounts received from the National Development Fund in rial 0 0 average weighted number of ordinary shares outstanding with the shareholders upon adjustment of dilution Obligations for amounts received from the National Development Fund in forex 0 0 impact of all potential ordinary shares. The average weighted number of ordinary shares (diluted) consists of 8,000,000,000,000 shares Obligations by borrowers/users for credit services 4,472 4,974 Obligations for mutual funds guaranteed 5,105,737 0 Obligations for drafts 3,689,767 2,958,258 57- Post-balance sheet events 28,847,484 20,301,828 From the balance sheet date until the approval date of financial statements, there has been no material event which might have affected the financial statements and required disclosures. (Under section 5 of the rules governing the minimum transparency standards and public disclosure by credit institutions.)
140 Annual Report 141 58- Bad (written-off) debts 59-2- Framework and chart of risk management Saman Bank has no record of bad/written-off debts as at March 20, 2017. The risk management is responsible for developing and controlling the bank’s risk management policies. Thus in line with the policy of effective risk management, Saman Bank has devised and created a Risk Management System comprising the High or Senior Risk Committee and the Risk Department as illustrated in the diagram 59- A profile of the bank’s risks below. The Risk Department report to the Bank Deputy for Supervision and shall have to implement the Saman Bank has devised and established a specialized and appropriate structure which is consistent with the decisions taken by the Senior Risk Committee. accepted framework of risk management. This structure will enable the bank to manage the significant risks in banking industry within the context of a business model devised for banking activities and operations. The information provided in this section is rooted in the bank’s operations and reflects the effect of risks on the balance sheet and the statement of the profit and loss. The key risks which are chiefly addressed by the Saman Board of Directors Bank management in compliance with the risk management guidelines recommended by the Basel Committee (Basel II) are listed below: • Credit risk Senior Risk Committee
• Liquidity risk CEO • Market risk
• Operational risk Risk Department The foregoing risks emerge from the bank’s business model and the risk management mechanism. In the current model, attempt has been made to identify the events which may affect the level of the bank’s achieving its paramount goals within the framework of risk management. More notably in parallel with the risks evaluation, the bank’s risk management will take the anticipated loss index as well as the quantitative and qualitative models into • At Saman Bank the responsibility for all accepted risks shall remain with the Board of Directors. account and will continuously develop and enhance its evaluation models and patterns. • The Bank’s Senior Risk Committee shall regularly monitor and measure the existence, accuracy and 59-1- Relationship between various business segments and the key risks each segment is exposed to: adequacy of the management policies and processes, control and encounter with various risks affecting the bank’s operations. Additionally, the Senior Risk Committee shall also have to ensure the compliance Saman Bank has a strong determination to counter the business risks and environmental uncertainties. The of the bank’s procedures for internal controls with the framework recommended by the Central Bank of key business segments impacted by financial risks include the retail banking division which is substantially Iran, to monitor implementation of the risk policies adopted by the Committee and the board of directors affected by credit and liquidity risks and the corporate banking division which is influenced by various credit, by concentrating on the consolidation and enhancement of bank reputation and position and to maintain a liquidity and market risks. The operational risks may accordingly affect some areas of current activities of the proper capital adequacy ratio as required. The outcome of the Committee’s actions shall be submitted to the segments which will be surveyed and evaluated by applying the common practices. bank’s board of directors under the title of “Guiding and Supervisory Reports”. • The High Risk Committee, regarded as a key body which substantially affects the various risk management areas pursues the following goals: Saman Bank – To approve the level of risk appetite and desired capital adequacy ratio every six months, monitor the process of this ratio and prepare it for approval by the board of directors along with the key policies for maintenance of this ratio up to the desired level.
Private International Corporate Retail – To approve the annual report on the performance appraisal of the bank’s risk management system and banking banking banking banking prepare it for submission to the board of directors to be incorporated in the annual report addressing the shareholders’ general meeting.
Credit risk Low Credit risk Low Credit risk Average Credit risk Low – To approve the annual risk management plans concerning the development, improvement and implementation of the risk measurement, assessment and management systems in the bank which may include procurement of required hardware and software facilities and recruitment of human resources. Market risk Low Market risk Average Market risk Low Market risk Low – To review reports and conduct periodic assessment on the calculation and measurement of the bank’s overall risks and identify the improved areas (with emphasis on the compliance with the approved Liquidity risk Low Liquidity risk Low Liquidity risk Average Liquidity risk Low policies for the risk control management, cases of non-compliance, departments and persons involved, feedback policies in respect of non-compliance and effectiveness of such policies) and provide information to the board of directors on the outcomes of the evaluation and measures taken in these Operational risk Low Operational risk Low Operational risk Low Operational risk Average areas. • The Risk Department has been created to act as an executive arm of the High Risk Committee with the aim of fulfilling the requirements set forth by the Central Bank of Iran and preparing the grounds for execution of the guidelines recommended by the Basel International Committee. This department will identify the principal financial risks as accepted by the Basel Committee including credit, liquidity, market and operational risks and will report them to the High Risk Committee, the CEO, and other appropriate committees. The Risk Department reports to the Bank Deputy for Supervision as specified in the organization chart. More importantly, this Department performs its functions in compliance with the directives and instructions of the High Risk Committee towards accomplishment of its goals.
142 Annual Report 143 59-3 Credit risk counterparties or a group of related counterparties. Considering the segregation of Retail and SMEs Banking and Corporate Banking, in Saman Bank, the prevalent criteria and standards for decision making on loans 2 59-3-1- Definition of the credit risk and liabilities will include the three areas of: Large Loans and Liabilities , Related Parties, Loans and Liabilities, and Retail and SMEs Loans and Liabilities. Credit risk is the likelihood of suffering loss arising from the counterparty’s failure to meet his contractual obligations with respect to the principal amounts and interests. That is the reason why the main component Large loans and liabilities in banking operations will meaningfully be premised on the correct performance, design and implementation of written procedures and policies for identifying, assessing, monitoring and controlling the credit risk. The Loans and obligations in the area of corporate banking shall be based on customer due diligence (CDD) of a 3 credit policies will provide a framework for financings and granting credit facilities by the bank. Obviously, single borrower or beneficiary . The following persons will fall under the category of single beneficiary: the bank credit policies shall include the matters such as target markets, portfolio composition, pricing • Natural or legal person independently requirements, terms of reference, loan approving or sanctioning authorities, reporting procedures, the process relating to list of exclusions and … Such measures shall be clearly defined in line with the banks’ • The ownership relationships between the natural and legal persons which include the following: contingent procedures and shall be appropriate to the scale and complexities of banking operations. – A natural person as well as his/her spouse and dependents with affiliates and their associates; More significantly, the credit policies shall be devised and implemented with a view to the internal – A legal person/entity with affiliates and their associates; and external factors such as the bank market position, business locations/areas, staff capabilities and technological advances. – Affiliates and associates of a natural person or a legal entity having interrelationships provided that multiplication of their ownership percentages in such units will be at least 20%. Arguably, these policies shall particularly define the banks’ objectives in the areas of portfolio composition, exposure limits of the counterparty or a group of related parties, special industries or economic sectors, • The managerial relationships between the legal entities which include the following: geographical regions and special products. In general, banks shall ensure that their internal exposure limits – A legal entity with other legal entity having at least two thirds of joint board members; are consistent with any type of contingent limitations or scopes which have been determined by the banking inspectors (regulators). – A legal entity with other legal entity having joint chairmanship of board of directors; • The financial relationships between a legal entity and a natural person which include the following: 59-3-2- Credit policies and procedures – A natural person with his/her spouse and dependents; Saman Bank credit policies covering loans, facilities and outstanding debts or claims due to this bank are described as follows: – The obligor with obligee provided that the amount of guarantee comes up to at least 75% of the obligor’s annual income or assets. The reverse relationship in this proportion may apply when these A- Loan facilities: to abide by the authorized sanctioning limits and amend the loans portfolio based on two parties have mutually agreed on counter guarantees; tenor and return. – Party (A) with party (B) provided that over 50% of the gross annual income of party (A) is funded by B- Claims: To reduce the debt balance (receivables) and review the records of large debts party (B). The reverse relationship of this proportion does not apply; Accordingly, the most significant plans and credit requirements of the bank are as follows: – The persons who each holds at least 20% of shares or capital with a voting right for a legal entity; • To set the quantitative goals of the policy on loan facilities, debt collection, letters of guarantee and – The persons who earn each over 50% of their gross annual income from the same income source. letters of credit; • To define the scope of powers or sanctioning authority of credit departments in granting loans and collecting debts; • The controlling relationships between a natural person and a legal entity include the following: • To install and implement the monitoring systems for granting loans; – A natural person as well as his/her spouse and dependents with a legal entity who has in any manner arranged the voting right of over 20% of such legal entities’ votes • To emphasize the customers’ repayment capacity for receipt of loans; – A legal entity with other legal entity who has in any manner arranged the voting right of over 20% of • To establish a supervisory and controlling system over the quality of informational reports; the other legal entity’s votes • To mitigate the risk of loans and commitments by receiving secure collaterals; – A natural person or a legal entity with other legal entity who has the power to direct and control the • To comply strictly with the regulations governing the single borrower/beneficiary, related parties as financial and operational policies including the decisions on the distribution of dividend or profit well as the large loans and debts; – A natural person or legal entity with other legal entity who has the power to appoint or dismiss the • To regularly hold the meetings by Restructuring and Debt Collection Committees at various levels so majority of board members of the entity in any manner arranged as to take decisions on the customers’ outstanding debts as quickly as possible; When single borrowers/beneficiaries are identified, the corporate banking offices shall enter the • To pay special attention to the reasons for growing overdue and outstanding debts, paid letters of information about the loan borrower in the bank’s statistics and database management system in the unit credit, paid letters of guarantee by preparing a statement, filing a report and making necessary of the single beneficiary. recommendations; Payment of loans to or creation of obligations for any single borrower which may cause such loans and • To conduct periodic inspections by the inspectors named in relevant directives and pay random visits obligations to fall under the category of Large Loans and Liabilities shall have to receive the approval of to the loan business places for monitoring their progress, and functionality by supervisors, credit the bank board of directors. Therefore, if the customer meets the requirements for receipt of loans and committee members and other competent authorities. obligations within the stipulated limits, he shall finally have to obtain the authorization from the board of directors. 59-3-3- Executive units of credit risk management
The implementation areas will include across-the-board sectors (all departments and divisions) of the bank 2. It means the total net loans granted and the liabilities so created to or for each single beneficiary which will add up to at least 10% of the bank in particular, branches, credit affairs division, debt collection office, credit committees and other credit units. base capital. 3. Single borrower or beneficiary means a natural person or a legal person independently or two or more natural persons who may on the grounds 59-3-4- Scope of powers at various organizational levels for sanctioning loans and liabilities of enjoying ownership, managerial, financial or controlling relationships or otherwise place the bank exposed to risks (in a vulnerable position) in such a way that the problems pertaining to one of them can affect the other/others and this domino effect may result in the failure of repayment An important element of credit risk management is to specify the level of exposure for individual or default on the loan obligations.
144 Annual Report 145 Limits of large loans and liabilities • Natural persons: all natural persons over the age of 18 applying for any amount of loans and obligations • The maximum total large loans to and obligations by ay single borrower shall not exceed 20% of the bank capital • Legal entities: that group of legal entities that along with the relevant single beneficiaries make a request for loans and liabilities for the maximum amount of Rls 500 billion and/or its rial equivalent in • The maximum total large loans and obligations will be eight times (eightfold) of the bank’s base capital foreign currencies • When the loan amount requested by a single borrower is more than the specified limit in the All branches are required to accept and consider the credit applications within the above mentioned limits applicable regulations, the bank may under the prevalent rules, apply the procedures for granting and, where the amounts of such applications are in excess of the stipulated limits, they have to send them joint-loans (such as syndicated, consortium or similar methods) to the Corporate Banking Department in coordination with the Retail and SMEs Banking Department. Regardless of the loan amounts being requested or used, any credit services to the following customers Loans to and liabilities by related parties shall be provided solely by the Corporate Banking Department: 4 The loans to and obligations by related parties will be based on the KYC of related parties . The following • Manufacturing companies with a registered capital in excess of Rls.100 billion persons will fall under the category of related parties: • Trading and service companies with a registered capital in excess of Rls.120 billion • Directors of the credit institutions including board members, managing director (CEO), deputy managing director and other executive board members; • State-run corporations and non-governmental public organizations • Independent auditor (whether the auditing firm and copartner) and legal inspector of credit institution; • Related parties and bank’s subsidiaries and affiliates • A natural person and his family members including the father, the mother, the spouse and the • Subsidiaries and affiliates to other banks children who jointly or severally own at least 5% of shares in the credit institution; • Public joint-stock companies listed on the Stock Exchange • The father, mother (parents), spouse and children of the related parties stated in items 1 and 2 above; Sanctioning bodies in Retail and SME Banking Department • A legal entity whose capital or shares are owned by the related parties stated in items 1,2,3 and 4 above in a manner that the said related parties have the authority to appoint at least one member of In managing the retail and SME banking affairs, the branches of Saman Bank vary in terms of credit the board of directors in this legal entity; sanctioning authority, and are categorized into five classes: • A legal entity in which the related parties stated in items 1,2,3 and 4 above hold management Top Group Branches, Group I Branches, Group II Branches, Group III Branches and Group IV Branches. The positions (board member, executive board, managing director (CEO) and deputy managing director); scope of credit sanctioning powers of each group for acceptance and approval of the types, components and amounts of collaterals shall be subject to the requirements set forth in a Saman Bank directive • A legal entity that directly holds at least 5% of shares in the credit institution; governing The Requirements for Granting Retail and SME Loans and subsequent amendments and • A legal entity in which at least 10% of its capital or shares is directly owned by the credit institution; annexes thereof. • A legal entity in which at least 20% of its capital or shares is directly owned by the legal entities stated For the purpose of approving credit loans and letters of guarantee and in compliance with the scope of in item 8 above. credit sanctioning authority defined for branches, all the bank branches shall have to review and decide on all the customers’ credit applications being consistent with the scope of delegated powers (by computing Limits of loans to and liabilities by related parties the customer’s current debts and liabilities) at the commissions which are held at the various levels of bank organization. The commissions which are authorized to make decisions on granting loans in rials Individual limit: the total net loans to and obligations by each person shall not exceed 3% of the bank’s and foreign currencies, issuing letters of guarantee, opening letters of credit and entering orders for base capital documentary drafts guaranteed by the bank include the following: Group limit: the total net loans to and obligations by related parties shall not exceed 40% of the bank’s • Branches Credit Commission base capital • District Credit Commission (District head office) The bank board of directors shall approve the loans to and obligations by related parties prior to the grant of any loans or creation of any obligations. The board meetings for decision making on the grant of loans • Internal SME Credit Commission to or creation of obligations by the related parties shall be held without the presence of the related parties • SME High Credit Commission involved in this process. The scope of sanctioning authority in rials delegated to credit commissions of branches Corporate loans and liabilities and district head offices The Corporate Banking Commission shall have the authority to sanction the loans and credit lines for each corporate customer up to the limit of Rls. 800 billion and the bank board of directors shall approve the Sanctioning authority of credit commissions of branches (in million) amounts of loans in excess of Rls. 800 billion. First grade collaterals: type I First grade collaterals: type I First grade collaterals: and IV combined or first grade Type of loans and second grade guarantees 5 type I, II and III collaterals: type I and second Retail and SMEs loans and liabilities Type of Commission combined andcredits in rial grade combined The loans and obligations in the area of retail and SMEs banking shall be based on the type of customer Natural persons Legal persons Natural persons Legal persons Natural persons Legal persons and the amount of requested loans. Thus, the prevailing criteria for identifying the retail and SMEs Class III and IV Loans in rial 50,000 50,000 1,500 2,500 600 1,000 customer include the following: Branch Credit Commission LGs in rial 50,000 50,000 1,500 2,500 600 1,000 Class III and IV Loans in rial 50,000 50,000 2,500 4,000 1,000 1,500 Branch Credit 4. Related parties are natural and legal persons who have the power to directly and/or indirectly control the decisions taken in the bank or have Commission LGs in rial 50,000 50,000 2,500 4,000 1,000 1,500 significantly influenced in one way or another such as personal, ownership, managerial or supervisory relationships in a way that they may Class III and IV Loans in rial 50,000 50,000 4,000 6,000 1,500 2,500 preferably use the bank as their financial resources and thus the bank’s interests are overshadowed by the interests of the said persons. Branch Credit 5. SME or Business loans: means facilities granted to the targeted trade union or guild for the purpose of providing working capital to run and Commission LGs in rial 50,000 50,000 4,000 6,000 1,500 2,500 expand the existing businesses or create new business ventures. Class III and IV Loans in rial 50,000 50,000 6,000 9,000 2,500 4,000 Retail loans: means the facilities granted to meet the consumer needs of retail customers such as home repairs and purchase of housing and Branch Credit LGs in rial 50,000 50,000 6,000 9,000 2,500 4,000 consumer goods. Commission
146 Annual Report 147 The scope of sanctioning authority in foreign currencies delegated to credit commissions of 59-3-5- Methods of reducing credit risk branches and district head offices One way of mitigating the credit risk is the collateral coverage with a view to the risk level and debt liquidity ratio. Considering the risk exposure, collaterals may be divided into three grades: Sanctioning authority of foreign exchange branches and District Credit Commissions (in million)
First grade collaterals: type I First grade collaterals and guarantees First grade collaterals: type Authority for the 1st, 2nd and and IV combined or first grade I and third grade guarantees Type of Type of loans in rial 3rd grade collaterals collaterals: type I and second First grade collateral of type I: includes the cash collateral in the short-term investment deposit in combined • Commission and forex obligations grade combined rial at the interim zero interest rate and without banking card (short-term investment deposit in rial coded 836 for natural persons and 837 for legal persons). Natural persons Legal persons Natural persons Legal persons Natural persons Legal persons Loans in rial 50,000 50,000 1,500 2,500 600 1,000 • First grade collateral of type II: includes the cash collateral in the ordinary short-term investment LGs in rial 50,000 50,000 1,500 2,500 600 1,000 deposits in rial. Sight LCs 50,000 50,000 4,000 6,000 1,500 2,500 • First grade collateral of type III: includes short-term investment deposits and special Class III and IV Term LCs (usance) 50,000 50,000 2,500 4,000 1,000 1,500 short-term deposits in foreign currency, long-term investment deposits in rial (excluding Atieh Branch Credit and refinance Savings Deposits), short-term investment deposits in rial and foreign currency at an interest rate Commission higher than the ordinary rate, special short term investment deposits in rial and foreign currency, 15% of LCs and/or 35% forex drafts to long-term registered and bearer certificates of investment deposits issued by Saman Bank, To be decided by branch guarantee fulfillment investment certificates of fixed income funds for which Saman Bank is acting as the registrar or of forex obligations guarantor of the fund’s units. Loans in rial 50,000 50,000 2,500 4,000 1,000 1,500 • First grade collateral of type IV: includes participation bonds issued by the CBI as well as the LGs in rial 50,000 50,000 2,500 4,000 1,000 1,500 participation bonds issued by the state (governmental bonds). Sight LCs 50,000 50,000 4,000 6,000 1,500 2,500
Class II Term LCs (usance) Second grade collaterals and guarantees 50,000 50,000 2,500 4,000 1,000 1,500 and refinance Branch Credit Include immovable properties and shares of companies listed on the stock exchange (excluding the Commission 15% of LCs and/or shares of companies which are traded on the agreed basic market). The immovable properties which 35% forex drafts to are introduced for loan security shall be real-estates or residential apartments or office buildings with To be decided by branch guarantee fulfillment six shares or parts of absolute ownership, valuable, easily marketable, uncontested and located in the of forex obligations municipal areas or bounds with a valid certificate of construction work completion. The mortgage of Loans in rial 50,000 50,000 4,000 6,000 1,500 2,500 apartments used for business and residential purposes with a maximum age of 25 years as well as the real LGs in rial 50,000 50,000 4,000 6,000 1,500 2,500 estates (villas) used for business and residential purposes without the age limit shall meet no impediment. Sight LCs 50,000 50,000 5,000 8,000 2,000 3,000 Additionally, the valuation of collaterals should be conducted in compliance with the provision set forth in the last review under the directive No. 92-310-1599 covering the valuation of immovable properties. Class I Term LCs (usance) 50,000 50,000 4,000 6,000 1,500 2,500 Branch Credit and refinance Commission Third grade collaterals and guarantees 15% of LCs and/or 35% forex drafts to The third guarantees means the guaranteed promissory notes received from customers. It should be noted To be decided by branch guarantee fulfillment that the branches when accepting the promissory notes from customers shall fully and absolutely abide by of forex obligations the provision of the last review of the directive No. 92-310-2232 covering the requirements for completion,
Loans in rial 50,000 50,000 6,000 9,000 2,500 4,000 signature and receipt of guaranteed promissory notes. LGs in rial 50,000 50,000 6,000 9,000 2,500 4,000 Sight LCs 50,000 50,000 7,500 12,000 3,000 5,000 59-3-6- Customer’s credit scoring process
Top Term LCs (usance) The credit scoring or rating process shall include certain proper criteria used to evaluate, measure and 50,000 50,000 6,000 9,000 2,500 4,000 Branch Credit and refinance obtain accurate information on the bank’s target market, borrower’s credit quality, counterparty’s credit Commission goals, its structure and funding sources for repayment. The sequence and priority in this process are 15% of LCs and/or described below: 35% forex drafts to To be decided by branch guarantee fulfillment • Credit nature and goal: The applicant’s business objective shall be acceptable to the bank which of forex obligations means that it should be legal, non-speculative and consistent with the borrower’s previous background. Additionally the bank shall ensure that the credit facilities are used to finance the applicant’s normal business operations. The loan size shall also be adequate for the customer’s goal and shall sound reasonable relative to his available funds. More arguably, with the growth rate The scope of sanctioning SMEs credit commissions of laundering activities in the modern business world, it is highly essential to fully understand and determine the clarity of the purpose of the requested credit facilities. Sanctioning authority of district credit commissions of branches in rial and SMEs credit commissions • Type of credit facilities: Such facilities may include: current account overdraft, hire purchase loan First grade collaterals: type I First grade collaterals: type (by installment), consumer lending loan, working capital loan, long-term loan, leasing loan, credit Authority for the 1st, 2nd and 3rd grade and IV combined or first grade I and third grade guarantees collaterals collaterals: type I and second cards, real estate loan, business loan, mortgage backed loan, building construction loan, retail loan, Type of Commission combined grade combined factoring, … . Natural persons Legal persons Natural persons Legal persons Natural persons Legal persons • Eligibility for borrowing: The lender shall consider the customer’s legal capacity. Arguably, the District offices commission 10,000 minor, the poor and the mentally retarded persons do not have the capacity to enter into transactional Internal credit commission Internal credit commission 30,000 50,000 15,000 25,000 agreements or contracts. Under such circumstances, they need the appointment of a guardian for Retail and SME credit commission Internal credit commission 150,000 their affairs.
148 Annual Report 149 • Guarantees: Whenever a collateral security is needed, certain factors such as adequacy, capability, Overall credit scoring/rating process credibility and authenticity of the collateral should be taken into account. • The primary responsibility for receiving customers, allocating credit loans, preparing credit reports, • Review of the borrower’s financial position: When a customer’s financial status is analyzed, it will be assessing customer’s scores, making enquiries from the existing sites/databases and keeping the highly important to review how his business operations have the capacity to generate sufficient cash relevant data and information shall remain with the branches. flows for fulfillment of his obligations. From among the various factors which may be used to measure In addition to the said reports and records, all branches shall, for payment of business loans up a customer’s financial standing, these items are worth mentioning: repayment capacity, liquidity, • to the limit of ten billion rials (like loans for working capital, business expansion and/or business repayment willingness. creation) act for a site visit of the customer’s business location, examination of financial statements • Repayment capacity forecast: The lender should obtain a reasonable assurance of the borrower’s and preparation of a report on his financial position and then in the final analysis, prepare an expert ability to service his obligations on the due date in future. report containing an express opinion on the customer’s credit file which will serve as a basis on which decisions are to be made as appropriate. • Profitability: The expense of financing for the customer, the remuneration paid to employees with respect to credit assessment, credit grant and credit monitoring, rental costs and other general • The responsibility for receiving the proposals made by branches, evaluating the customer’s scores/ expenses shall be covered (normally received as prepayment) by the return created on the loans rates, managing the credit limits assigned for branches and expressing opinion on the suggested granted. In reality, a comfortable profitability shall be measured by the capital expenses. credit shall rest with credit commissions. • Continuous monitoring: credit facilities should be constantly monitored through various methods • The responsibility for sanctioning credits in the decision-making departments in respect of the credit and channels: risk exposure limit, capital allocation and periodic reports by the type of customer, size shall remain with credit commissions. borrowing position, segment and… . • The responsibility for providing an independent opinion on the loans granted by designing and updating the scoring/rating system, controlling and monitoring the credit risk shall remain with the Essential requirements for processing a credit file risk management department. Since the process of granting loans in Saman Bank starts with submission of the customer’s application by • The functions assigned to the risk management department are segregated from the functions of the filing credit records, it is essential to meet the following requirements in this initial process: business activity and customer relationship management in credit areas. • Customer’s CDD • The policies on decision-making, monitoring and reporting independently about the credit risk shall • Access to customers’ credit records shall be subject to the confidentiality rules and policies which be valid under any circumstances. prevail in the bank 59-3-7- Analysis of credit quality • The bank shall have to ensure that the loans are used for the objective declared by the customer The bank assets quality including loans, liabilities/obligations, investments, type, amount and adequacy of the The bank shall ensure that all appropriate forms and legal documents have been signed by the • collaterals received (ratio of loans balance to updated value of collaterals) LTV in terms of credit risk profile applicant prior to the loan allocation have been illustrated in tables 59.3.7.1 through 59.3.7.4. • The bank shall treat credit applications on a fair and non-discriminatory basis 59-3-7-1- Analyzing credit quality of loans granted, obligations and investments based on • The bank credit facilities shall be granted to various industrial sectors with a view to the non-concentration principle the bank’s internal credit scoring/rating system • The bank shall maintain an appropriate collateral margin for various credit facilities It should be noted that the customers’ scoring/rating system in Saman Bank is in the process of formation. Although the credit system has been designed, classification of the bank’s customers by the degree of risk • Any type of regulation, by-law and directive shall be drafted and adopted in compliance with the exposure has not been performed yet. applicable laws and rules of the Central Bank of Iran • The credit files shall contain the following items: 59-3-7-2- Table for analyzing the credit quality of the loans granted, obligations and investments based on the assets categories – Proof of identification and verification for the customer and guarantors
A signed copy of credit application Obligations under LGs – Loans granted to banks Loans granted to customers and LCs – The expert opinion including: 2018 2017 2018 2017 2018 2017 – The objective of loan facilities Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) – Collaterals and guarantees Current 0 0 115,735,133 108,426,152 17,590,348 9,450,964 – Customers’ obligations Overdue 0 0 4,499,812 1,752,674 0 0 – General background information Outstanding 0 0 825,883 2,928,083 0 0 – Approval of relevant department or management Doubtful 0 0 23,488,325 20,855,807 0 0 – Customer’s record/reputation with the bank Total gross amount 0 0 144,549,153 133,962,716 17,590,348 9,450,964 – Analysis of financial status Value inpairment reserve 0 0 (6,712,515) (6,212,515) 0 0 – Analysis of competitive position Net book value 0 0 137,836,638 127,750,201 17,590,348 9,450,964 – Cash flows forecast – Documentation relevant to collaterals and guarantees – Credit transaction structure/arrangement – Audited financial statements – Business licenses legally issued
150 Annual Report 151 59-3-7-3- Credit quality of participation bonds, Islamic treasury bonds, Sukuk bonds, units 59-3-7-4- Types and amounts of collaterals received from credit customers of mutual funds and similar items Types of main collaterals 2018 2017 Credit quality analysis Rls(m) Rls(m) 2018 2017 Loans granted to natural persons Rls(m) Rls(m) Cash 3,109 26,138 Issued by the government and Central Bank Participation/Sukuk bonds 24,420 5,475 Ministry of Economic Affairs and Finance 10,000 0 Marketable securities (shares) 189,143 116,178 10,000 0 Non-listed securities (shares) 0 0 Issued by governmental corporations Deposits 4,748,797 4,541,438 Shahrivar Sevom Financial Intermediary Co. 291,190 0 Real estate properties 46,704,603 58,876,267 Tir Sevom Financial Intermediary Co. (Ltd.) 1,898 0 Plant and equipment 16,050 66,233 Mehr Financial Intermediary Co. (Ltd.) 55 0 Letters of guarantee 27,194 31,118 Bahman Sevom Co. 34,800 0 Checks/Cheques 44,759,780 38,106,060 Shahrivar Chaharom Financial Intermediary Co. (Ltd.) 3,033,200 0 Promissary note 5,627,211 7,571,833 3,361,143 0 Enforcable contracts 7,018,753 8,891,570 Issued by non-governmental corporations Ordinary notes/documents 5,478 13,140 Novin Saman Fixed-income Fund 0 15,000 Guaranteed notes 76,899 136,633 Saman Yekom Mutual Fund 10,000 15,000 Affidavits 3,622 1,812 Agah Yekom Charity Fund 2,500 2,500 Letters of commitment 110,526 83,000 Amin Saman Investment Bank 10,000 10,000 Conveyence of rights deed 0 9,275 Mutual Fund for Iran Capital Market Development 35,000 35,000 Power of attorney 0 4,519 Nikandishanhonar Charity Fund 2,535 2,535 Letter of intent for sale 6,720 175,975 Negin Saman Fixed-income Fund 49,000 49,000 Loans granted to legal persons Tir Yekom Financial Intermediary Co. 800 0 Cash 3,957 35,363 Khordad Dovom Financial Intermediary Co. (Ltd.) 29,938 0 Participation/Sukuk bonds 527,960 27,640 Mehr Yekom Financial Intermediary Co. 50 0 Marketable securities (shares) 8,145,187 10,346,763 139,823 129,035 Non-listed securities (shares) 0 0 3,510,966 129,035 Deposits 7,085,518 6,878,314 Real estate properties 43,187,884 32,421,146 Plant and equipment 2,887,369 4,035,466 Letters of guarantee 5,394,662 83,323 Checks/Cheques 197,114,630 150,915,811 Promissary notes 15,561,725 13,435,795 Enforcable contracts 18,462,664 14,369,956 Ordinary notes/documents 314,950 0 Guaranteed notes 408,300 20,363 Affidavits 222,300 0 Letters of commitment 245,642 100,675 Conveyence of rights deed 810,898 400 Power of attorney 158,242 0 Letter of intent for sale 36,567 1,418 409,890,760 351,329,097
Based on the written report filed by the bank’s expert, the said amount is the mortgaged value of all collaterals in possession.
152 Annual Report 153 59-3-7-5- The balance of loans based on the ratio of loans balance (less provisions) to 59-3-8-1- Distribution table of loans and investments by economic sectors and their inland updated cash value of collaterals and overseas concentration
2018 2017 Loans granted Investments Obligations for LGs & LCs Rls(m) Rls(m) 2018 2017 2018 2017 2018 2017 Loans granted to banks Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Less than 50% 0 0 Book value 144,549,153 133,962,716 13,435,948 2,777,794 17,590,348 9,450,964 51 to 70% 0 0 Loans/liabilities by economic sectors Industry 59-3-8-1 37,122,047 29,116,161 1,255,022 541,613 1,627,525 3,042,161 71 to 90% 0 0 Housing 17,028,850 22,010,644 0 0 3,436 - 91 to 100% 0 0 Commerce 55,851,207 51,015,087 0 0 12,336,916 5,951,402 Over 100% 0 0 Services 29,792,514 25,663,916 8,370,727 1,862,617 3,621,008 447,999 Loans granted to real persons Agriculture 1,183,906 1,065,813 0 0 761 0 Less than 50% 3,705,993 2,779,767 Banks 0 0 299,233 0 0 0 Mining 153,354 640,748 0 129,035 702 0 51 to 70% 4,529,865 2,810,853 Other 3,417,275 4,450,347 3,510,966 244,529 0 9,402 71 to 90% 6,683,796 3,718,785 144,549,153 133,962,716 13,435,948 2,777,794 17,590,348 9,450,964 91 to 100% 7,093,936 1,588,237 Size of loans/degree of obligations onshore Over 100% 14,943,150 31,165,264 and offshore (inland & overseas) Loans granted to legal persons Inland 144,549,153 133,962,716 13,435,948 2,777,794 17,590,348 9,450,964 Overseas 0 0 0 0 0 0 Less than 50% 3,338,070 3,599,886 144,549,153 133,962,716 13,435,948 2,777,794 17,590,348 9,450,964 51 to 70% 2,734,813 4,580,039 71 to 90% 3,119,666 3,015,186
91 to 100% 2,329,611 1,090,037 59-3-8-1-1- Distribution of loans, obligations and investments by type of industry Over 100% 89,357,738 73,402,147 137,836,638 127,750,201 2018 2017 Rls(m) Rls(m) In the calculation process, this amount is the updated mortgaged value of collaterals with respect to the liquidity factors specified in the directive Loan facilities for provisioning and assets classification. This table is to disclose the coverage of collaterals in the bank’s possession for the balance of Automobile and auto parts 36,429 4,239,313 customers’ debts. Mining and metal industries 90,836 4,964,306 Petrochemical, chemical industries and oil products 342,913 6,798,624 59-3-8- Credit risk concentration Foodstuffs and pharmaceuticals 3,498,090 9,794,677 Energy 0 2,282,707 The credit risk concentration in Saman Bank has been defined in a manner to reflect the type, volume, Contractual services 0 0 nature and content of credit risk. More significantly, the credit risk concentration will include the two Telecommunication, computer and associated industries 32,752,608 0 components of target market and maximum market share of credit portfolio. To this end, Saman Bank Financial intermediary 0 0 annually drafts an operational program in which the target market covering the on-and off balance sheet Others 401,170 1,036,535 items will be determined each year. Thus the bank will define its credit risk concentration in the following Investments areas: Automobile and auto parts 0 8,136 • Corporate banking Mining and metal industries 77,598 39,108 Petrochemical, chemical industries and oil products 0 0 Retail and SME banking • Foodstuffs and pharmaceuticals 4,440 5,366 Further it should be noted that the responsibility for defining and reviewing various economic sectors Energy 2,558 7,227 including goals and total amounts of credit portfolio shall remain with the High Committee for Strategy and Contractual services 52,587 0 Budget. Telecommunication, computer and associated industries 1,398 2,735 Financial intermediary 42,190 171,848 Others 1,074,251 307,193 Obligations Automobile and auto parts 186,078 347,815 Mining and metal industries 113,416 211,996 Petrochemical, chemical industries and oil products 753,202 1,407,881 Foodstuffs and pharmaceuticals 413,153 772,262 Energy 0 0 Contractual services 0 0 Telecommunication, computer and associated industries 0 0 Financial intermediary 0 0 Others 161,677 302,206 40,004,594 32,699,935
154 Annual Report 155 59-3-8-2- Distribution table of loans by participation, constant (fixed) profit contracts and 59-3-9-1- Distribution of non-current loans by economic sectors type of customer Non-current loans balance Specific provision for doubtful debts Net loans and non-current claims
Loans granted during the year Loans balance at year-end Economic Sector 2018 2017 2018 2017 2018 2017 Amount Total percentage Amount Total percentage Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Percentage Rls(m) Percentage Industry 8,960,649 9,270,035 1,743,404 1,914,803 7,217,245 7,355,232 Housing 1,530,551 1,654,502 112,609 87,090 1,417,942 1,567,412 Real customers 7,786,920 2.7 13,857,880 9.8 Cconstant (fixed) profit contracts Commerce 14,527,163 10,884,492 2,279,234 1,765,965 12,247,928 9,118,527 Legal customers 59,136,570 20.5 31,155,054 22 Services 3,389,665 2,857,566 721,184 535,613 2,668,481 2,321,953 Real customers 13,368,847 4.6 24,102,272 17.1 Participation contracts Agriculture 195,778 203,851 5,322 10,017 190,456 193,834 Legal customers 208,134,922 72.2 72,245,576 51.1 Banks 0 0 0 0 0 0 288,427,259 141,360,782 Mining 2,379 1,045 0 95 2,379 950 Other 207,835 665,073 71,000 119,170 136,835 545,903 The Gharzolhasaneh (interest-free) loans have been classified as non-constant profit contracts. 28,814,020 25,536,564 4,932,753 4,432,753 23,881,266 21,103,811 59-3-9- Procedures for managing non-current loans The bank’s policy on the management of non-current claims is premised on preventive measures supported by collaterals and proper management with follow-up actions and debt collection procedures. 59-3-9-2- Balances of foreclosed assets Considering the requirement set forth in the Law on the Elimination of Barriers to Competitive Production 2018 2017 and Enhancement of National Financial System passed on April 21, 2015 by the Islamic Parliament and in compliance with the CBI’s directive No. 94/69383 governing the procedures for calculation and distribution of Rls(m) Rls(m) shared profit, banks shall have to reform their assets structure and increase the share of income-generating Movable properties 0 0 assets through the sale and disposal of the foreclosed properties and assets and collection of debts. In order Residential real properties 6,967,737 5,368,409 to improve its assets structure and achieve the targets set for collection of non-current debts, Saman Bank Business/Office properties 11,086,676 10,298,942 takes appropriate measures within the context of its own internally approved by-laws and procedures. To Plant and Equipment 5,172,037 4,426,484 this end, where the follow-up actions towards collection of the bank’s claims in the pending files (including movable and immovable properties and/or rights and privileges which will be held or put under the bank’s Investments 0 0 ownership) fail to collect debts at branch levels and credit departments, measures will primarily be taken Debt securities 0 0 by relevant departments and Debt Collection Office and, at a later stage, legal actions will be taken by the Land 2,506,467 3,959,408 bank’s legal deputy. In performance of operational and strategic actions and subject to the applicable laws 25,732,917 24,053,243 and regulations, Saman Bank shall have to sell surplus and foreclosed assets and properties to collect its outstanding and doubtful debts. As has been contemplated in the organizational structure, the Collection Office shall be tasked with reducing the amounts of past-due loans. Accordingly, the bank’s Logistical Deputy shall be responsible for sale of the bank’s real estate properties. 59-3-10- Capital sum required for credit risk coverage Notably for the purpose of improving the assets and liabilities structure during the fiscal year 2017-2018, The amount of capital required for credit risk coverage will come up to Rls. 16,757,690/ million which has the amount of Rls. 20,216/ billion was recovered through the sale of the bank’s properties and the profit been calculated and presented in the table 59-3-10-1. gained from the sale whereby the amount of Rls. 10,642/ billion was the recovery from the sale of real estates and the amount of Rls. 9,574/ billion was the profit thereupon. The processing of the real estates 59-3-10-1- The table for calculating the capital required for credit risk coverage sale was handled by the bank’s Logistical Deputy. It is further noted that in line with the policy of reducing the amounts of past-due loans of which the responsibility rests with the bank’s Legal Deputy, the aggregate 2018 debts collected in 2017-2018 was the amount Rls. 10,436/ billion as planned whereby the amount of Rls. Assets and 7,954/ billion was recovered through the Bank’s Legal Deputy’s Office for the arrears of doubtful debts Type of asset Risk factor Risk level Allocated capital liabilities section. The residual amount of Rls. 2,482/ billion was recovered by the Debts Collection Office with the aim of reducing the size of outstanding and doubtful debts and hampering the increase in past due claims in Rls(m) Percentage Rls(m) Rls(m) aggregate, an amount of Rls. 10,436/ billion was collected out of which the amount of Rls. 1,095/ billion was Due from other banks and credit institutions 33,131,727 20 6,626,345 530,108 from outstanding loans collected or restructured and the amount of Rls. 9,341/ billion was from the doubtful Non-governmental participation bonds 30,788 100 30,788 2,463 debts collected or restructured. Investment in securities (shares) 9,625,750 100 9,625,750 770,060 The procedures for collecting claims and debts by all credit departments and offices of deputies are Due from subsidiaries and affiliates 2,928,844 100 2,928,844 234,307 governed by the applicable laws and regulations in the country adopted by the CBI as well as the bank’s Other accounts receivable 40,359,781 100 40,359,781 3,228,782 internal by-laws and directives. As prescribed in the prevalent laws, requirements and the bank’s internal Hire purchase and housing loans 58,345,618 50 29,172,809 2,333,825 by-laws, the overall procedures for collecting debts from sale of foreclosed properties and collaterals will Other loans granted and amounts due 82,031,229 100 82,031,229 6,562,498 sequentially entail and include calculation of mortgage debt, submission of documents, request for issuance Other assets 35,673,223 100 35,673,223 2,853,858 of enforcement writ, service of enforcement writ, inquiry about property registration status, official expert’s Guarantee for participation bonds issued by 0 100 0 0 appraisal report, notification of official expert’s opinion, issuance of authorization prior to the notice of sale non-governmental sector (conversion factor 50%) auction or bid, operating procedures for sale of foreclosed properties and liquidation of claims due to the Obligations for LGs issued (conversion factor 20%) 1,753,007 100 1,753,007 140,241 bank. Where the mortgaged real estate is not sold at the sale auction, the bank shall have to take possession Obligations for LGs issued (conversion factor 50%) 15,181 100 15,181 1,215 of six shares (the entire portion) or partnership in the foreclosed mortgage put up for sale pursuant to the Obligations for LCs issued (conversion factor 20%) 1,254,165 100 1,254,165 100,333 bank’s applicable rules and on the strength of the permits or licenses issued for this purpose. Obligations for LCs issued (conversion factor 50%) 0 100 0 0 265,149,312 209,471,122 16,757,690
156 Annual Report 157 59-4- Liquidity risk • To control and monitor the average cost rate of bank funding sources based on the amounts set in the annual budget; 59-4-1- Definition of liquidity risk • To adopt proper policies so as to keep the profit margin of resources and uses appropriate to the The liquidity risk means the possibility of impairing or endangering the bank’s ability to provide funds for rates or amounts set in the annual budget and submit proposals and proper solutions to the Senior fulfillment of its obligations. Strategy Commission; • To determine and approve the amount of annual contingent liquidity appropriate to the annual budget 59-4-2- Liquidity risk policies and processes and in compliance with the applicable laws and regulations and the recommendation made by the board of directors; The Saman Bank policy is typically to keep for each type of currency a cash buffer of at least 2% of the total deposits of the same currency which is being reviewed not to slide lower than this percentage. Further in this • To ensure the control and maintenance of liquidity level in various circumstances; arrangement, a limit has been set for transactions with other banks and there is strict control not to violate such limit. • To monitor interbank operations. The Treasury Department shall be responsible for the launch and execution of interbank operations. 59-4-3- Executive units of liquidity risk management Saman Bank has strong belief in active management of liquidity risk. To this end, this bank has developed 59-4-5-1- Liquidity reserves a coherent system to manage the liquidity risk. In this system, the Board of Directors, the Senior Risk The table below shows the composition of bank liquidity reserves: Committee, the Sources and Applications (ALCO) Committee, the Treasury Department and the Risk Department will play the leading roles. 2018 2017 Rls(m) Rls(m) 59-4-4- Credit risk measurement method (including bases and assumptions) Balance with CBI 3,886,993 4,171,647 In order to measure the liquidity risk, Saman Bank uses the existing financial ratios in Basel III which include Cash and balance placed with other banks 29,915,671 24,654,784 NSFR (Necessary Stable Funding Ratio) and LCR (Liquidity Coverage Ratio). Additionally, the liquidity gap which may exist between rial and foreign currencies shall be deployed for this purpose. Bonds issued by the government 10,000 0 33,812,663 28,826,431 59-4-5- Mechanism for controlling and monitoring liquidity risk The responsibility for controlling and monitoring the liquidity risk in Saman Bank shall remain with the Risk Department, Sources and Applications Committee and Treasury Department. The Sources and Applications 59-4-5-2- Table of liquidity ratios Committee shall be responsible to the Senior Risk Committee and the Board of Directors and shall trace up the following matters: Beginning of Max. during Min. during Mid-year Year-end • To review and control the financial ratios and indices and deviation from the budget with respect to the year the year the year the forecast of annual operating budget; Percentage Percentage Percentage Percentage Percentage 1 • To take decisions on the amount and optimal pattern of usage or consumption including credit lines, Cash and cash equivalent to total assets 15 14 17 11 16 foreign currencies, investments, cash or cash equivalent whether in rial or in foreign currency and Cash and cash equivalent to total deposits 14 13 15 10 14 interbank operations with a view to the level of impact on the bank profitability based on annual Net cash assets to total deposits 2 12 10 12 8 11 operating budget; Loan facilities to total deposits 50 50 52 47 47 • To take decisions on the rates of funding and allocation of rial-denominated and foreign currency Loan facilities to on-year term deposits and more 119 112 119 94 94 sources with respect to the needs, peers’ rates, international market rates and sanctioning authority 3 9 49 52 43 43 of executive units to change such rates with a view to their effect on profitability based on the annual Demand deposits to total deposits operating budget; 1. Cash and cash equivalent mean cash amounts, participation bonds and similar items with an active cash-traded market. • To take decisions on the solutions to liquidity coverage subject to the liquidity level approved by the 2. Net cash assets mean cash and cash equivalent, investment papers/certificates with an active cash-traded market less bank deposits, issued Senior Strategy Committee and Senior Risk Committee; debt securities, other loans and liabilities which will mature (fall due) by next month. To determine inter-departmental interest rates; 3. Demand deposits include the deposits without any contractual maturity such as current accounts, savings accounts and current interest-free • accounts and … . • To review and approve a contingency plan so as to face liquidity crisis with a view to the level of impact on the bank’s profitability, and where the decision-making goes beyond the scope of the commission’s authority, the relevant report shall be submitted to the Senior Strategy Commission and the Board of Directors; • To control the maturity dates of assets and liabilities, bank profitability trend, bank structure of expenses, profit sharing and non-profit sharing ratios, rate of return on assets and shares, cost of money within the defined authority and its impact on the bank profitability based on the annual approved budget; • To review and decide on the amount of investment size in the capital and commodity markets; • To review and analyze the bank investment portfolio and, in the case of any deviation from the approved budget, provide appropriate solutions towards achieving the bank’s operational goals; • To control and monitor the rate of loan facilities and return on assets of various types (loans, investments, interbank operations and…) based on the size established in the bank’s annual budget;
158 Annual Report 159 59-4-5-3- Analyzing the maturity of assets and liabilities The table below shows the maturity of the bank financial assets and liabilities based on the dates which would possibly be claimed or settled.
2018 2017 Without Without Less than 3 months to More than Less than 3 months to More than Book value 1 - 3 months 1 - 5 years specified Book value 1 - 3 months 1 - 5 years specified 1 month 1 year 5 years 1 month 1 year 5 years maturity maturity Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m)
Assets Assets
Cash in hand 36,749,077 36,749,077 0 0 0 0 0 Cash in hand 31,494,714 31,494,714 0 0 0 0 0
Due from banks and other credit Due from banks and other credit 10,687,731 10,687,731 0 0 0 0 0 9,676,030 9,676,030 0 0 0 0 0 institutions institutions
Due from the government 0 0 0 0 0 0 0 Due from the government 0 0 0 0 0 0 0
Loans granted to and amounts Loans granted to and amounts 0 0 0 0 0 0 0 0 0 0 0 0 0 0 due from governmental entities due from governmental entities
Loans granted to and amounts Loans granted to and amounts due due from non-governmental 137,836,638 67,162,827 24,814,101 24,822,418 15,241,346 5,795,946 0 from non-governmental entities/ 127,750,201 61,818,047 18,995,007 24,696,206 18,383,207 3,857,734 0 entities/persons persons
Investments in shares and other Investments in shares and other 13,435,948 8,537,811 850 55 3,391,026 0 1,506,206 2,777,794 397,383 0 0 0 0 2,380,411 securities securities
Due from subsidiaries and affiliates 2,928,844 0 0 0 0 0 2,928,844 Due from subsidiaries and affiliates 2,802,935 0 0 0 0 0 2,802,935
Other accounts receivable 40,359,781 40,359,781 0 0 0 0 0 Other accounts receivable 23,863,436 23,863,436 0 0 0 0
Tangible fixed assets 2,972,625 0 0 0 0 0 2,972,625 Tangible fixed assets 3,613,037 0 0 0 0 0 3,613,037
Intangible assets 2,216,341 0 0 0 0 0 2,216,341 Intangible assets 4,301,189 0 0 0 0 0 4,301,189
Statutory deposit 27,478,565 672,025 460,160 873,715 2,137,567 23,335,099 0 Statutory deposit 23,035,684 354,433 354,434 672,959 1,646,427 20,007,431 0
Other assets 35,673,223 8,369,851 1,070 14,445 25,716,867 0 1,570,990 Other assets 28,719,884 7,415,409 1,833,334 8,250,000 11,103,343 0 117,798
310,338,773 172,539,103 25,276,181 25,710,633 46,486,806 29,131,045 11,195,006 258,034,904 135,019,451 21,182,775 33,619,165 31,132,976 23,865,165 13,215,371
Liabilities Liabilities and Deposits
Due to banks and other credit Due to banks and other credit (9,014,314) (5,498,777) 0 0 0 (3,515,538) 0 0 0 0 0 0 (9,757,594) (7,249,282) 0 (2,508,312) 0 0 0 institutions institutions
Customers' deposits (26,399,333) (1,574,134) (1,574,137) (2,988,837) (7,312,308) (12,949,917) 0 Customers' deposits (17,062,512) (960,027) (960,029) (1,822,822) (4,459,603) (8,860,032) 0
Dividends payable (51,510) 0 0 0 0 0 (51,510) Dividends payable (52,483) 0 0 0 0 0 (52,483)
Debt securities 0 0 0 0 0 0 0 Debt securities 0 0 0 0 0 0 0
Provision for income tax 0 0 0 0 0 0 0 Provision for income tax 0 0 0 0 0 0 0
Provisions and other liabilities (8,469,046) 0 0 0 0 0 (8,469,046) Provisions and other liabilities (4,566,858) 0 0 0 0 0 (4,566,858)
Provisions for employees' Provisions for employees' (691,031) 0 0 0 0 0 (691,031) (537,312) 0 0 0 0 0 (537,312) termination and pension benefits termination and pension benefits
Investment depositors' equity (254,382,253) (5,292,757) (3,127,867) (5,938,960) (14,529,783) (225,492,886) 0 Investment depositors' equity (214,853,050) (4,407,489) (2,481,357) (4,711,295) (11,526,437) (191,726,471) 0
Total liabilities (299,007,488) (12,365,667) (4,702,004) (12,443,335) (21,842,092) (238,442,803) (9,211,588) Total liabilities (246,829,808) (12,616,798) (3,441,386) (9,042,429) (15,986,041) (200,586,503) (5,156,652)
Total shareholders' equity (11,331,285) (11,331,285) Total shareholders' equity (11,205,096) 0 0 0 0 0 (11,205,096)
Total liabilities and Total liabilities and (310,338,773) (12,365,667) (4,702,004) (12,443,335) (21,842,092) (238,442,803) (20,542,872) (258,034,904) (12,616,798) (3,441,386) (9,042,429) (15,986,041) (200,586,503) (16,361,748) shareholders' equity shareholders' equity
Gap 0 160,173,435 20,574,177 13,267,298 24,644,714 (209,311,758) (9,347,866) Gap 0 122,402,654 17,741,390 24,576,736 15,146,935 (176,721,337) (3,146,377)
Accumulated gap 0 160,173,435 180,747,612 194,014,910 218,659,624 9,347,866 0 Accumulated gap 0 122,402,654 140,144,043 164,720,779 179,867,715 3,146,377 (0)
Gap to base capital ratio (Percentage) 0 1,218 156 101 187 (1,591) (71) Gap to base capital ratio (Percentage) 0 931 135 187 115 (1,344) (24)
Accumulated gap to base capital Accumulated gap to base capital 0 1,218 1,374 1,475 1,662 71 0 0 931 1,066 1,252 1,368 24 (0) ratio (Percentage) ratio (Percentage)
Gap to effective base capital ratio Gap to effective base capital ratio 0 1,347 173 112 207 (1,760) (79) 0 1,029 149 207 127 (1,486) (26) (Percentage) (Percentage)
Accumulated gap to effective Accumulated gap to effective 0 1,347 1,520 1,631 1,839 79 0 0 1,029 1,178 1,385 1,512 26 (0) base capital ratio (Percentage) base capital ratio (Percentage)
160 Annual Report 161 59-4-5-4- Analyzing the contractual maturities of financial liabilities 59-4-6- Crisis contingency plan (liquidity stress test) 59-4-5-4-1- The table below shows the maturity of financial liabilities based on the maturity specified in In order to test the liquidity crisis in Saman Bank, it is essential to identify the factors creating liquidity the contract. crisis and make scenarios based on the assumptions which result from the existing facts. To this end, the operational plan for the stress test project is executed with the aim of studying and identifying the factors 2018 creating liquidity crisis in the bank by using the previous studies, determining the major risk factors, shock More Without and its impact on the assets and liabilities, designing the scenario in alignment with assets and liabilities, Less than 3 months to Book value 1 - 3 months 1 - 5 years than 5 specified 1 month 1 year years maturity modeling the liquidity crisis test based on the internal influential factors, predicting the possibility for emergence of liquidity crisis and maintaining an appropriate level of liquidity in response to cash outflows Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) and avoiding the source funding with substantial expenses. During the recent financial crisis, the liquidity Liabilities risk has been the main focus of attention in that, it has revealed how a crisis can accelerate the process Due to banks and other credit institutions (9,014,314) (1,002,136) (1,965,959) (126,136) 0 0 (5,920,083) of liquidity shortage in the market among the banks and even deter other large institutions from their Customers' deposits (26,399,333) 0 0 0 0 0 (26,399,333) operations. Previous to such financial crisis, there was no liquidity crisis test performed by any banks for Customers' deposits 0 0 0 0 0 0 0 the historical evidence did not indicate any sign of liquidity risk crisis on the grounds of liquidity events. As a Loans received from the National 0 0 0 0 0 0 0 general rule, in the banking industry, the inflow of sources should be consistent with the outflow of sources Development Fund the failure of which may lead to three possible scenarios to bring about liquidity shortage for the bank as Investment depositors' equity (254,382,253) (19,130,558) (17,127,876) (111,272,948) (847,371) 0 (106,003,500) follows: (289,795,900) (20,132,694) (19,093,835) (111,399,084) (847,371) 0 (138,322,916) • Scenario 1: In this scenario it is assumed that the inflow and outflow of sources by depositors will take place in normal conditions. However, the collection of debts by or recovery of sources from the 2017 borrowers will happen less quickly. As such, the borrowers will have the sources at their disposal for More Without a longer period of time. Less than 3 months to Book value 1 - 3 months 1 - 5 years than 5 specified 1 month 1 year years maturity • Scenario 2: In this scenario it is assumed that outflow of sources by depositors will happen more Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) quickly. As such, the inflow of new sources and return of sources by lenders will not cover the outflow Liabilities of sources. Due to banks and other credit institutions (9,757,594) (272,390) (1,487,542) (818,988) 0 0 (7,178,674) • Scenario 3: In this scenario, it is assumed that outflow of sources by depositors will increase and Customers' deposits (17,062,512) 0 0 0 0 0 (17,062,512) simultaneously return of sources by borrowers will slide out of normal conditions. Customers' deposits 0 0 0 0 0 0 0 Loans received from the National One of the most applicable ratios for testing the liquidity crisis is the LCR (Liquidity Coverage Ratio). To define 0 0 0 0 0 0 0 Development Fund a hypothetical scenario regarding LCR, it will be imperative to exercise hypothetical shocks to the inflow and Investment depositors' equity (214,853,049) (12,472,310) (11,551,203) (65,754,452) (9,855,400) 0 (115,219,684) outflow of assets and measure their impact on this ratio and crisis borderline. (241,673,155) (12,744,700) (13,038,745) (66,573,440) (9,855,400) 0 (139,460,870) Under normal circumstances and considering the background, the liquidity ratios including LCR have never reached the crisis borderline. Therefore, our scenario will be built on a hypothetical situation and not on historical data. There are various assumptions which may influence the occurrence of crisis including 59-4-5-4-2- The table below shows the maturity of financial liabilities in foreign currency based on the the external factors such as changes in inflation rate, foreign currency translation, housing price indexes, maturity specified in the contract. blocking Shetab payment system by the CBI and… . 2018 The impact of each externally exogenous variables on the balance sheet ratios and increase in the claims More Without Less than 3 months to ratio as well as decrease in the amounts of facilities and deposits will change the LCR (Liquidity Coverage Book value 1 - 3 months 1 - 5 years than 5 specified 1 month 1 year years maturity Ratio) and may ultimately approach the crisis borderline. Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Liabilities 59-5- Market risk Due to banks and other credit institutions (3,094,231) (1,002,136) (1,965,959) (126,136) 0 0 0 Customers' deposits (6,964,362) 0 0 0 0 0 (6,964,362) 59-5-1- Definition of market risk Customers' deposits 0 0 0 0 0 0 0 The market risk or the market value at risk (VaR) may be defined as the risk probability of uncertainty in Loans received from the National 0 0 0 0 0 0 0 trading portfolio revenues of a financial institution as a result of changes in market situation such as asset Development Fund prices, interest rates, market volatility and market liquidity. The market risk will probably emerge when a Investment depositors' equity (25,376,717) (14,999,767) (2,174,486) (6,468,079) 0 0 (1,734,385) financial institution is actively engaged in trading assets, liabilities and derivative instruments and not when (35,435,310) (16,001,903) (4,140,445) (6,594,215) 0 0 (8,698,747) such items are held for long-term investments, financing and hedging purposes.
59-5-2- Executive units charged with market risk management 2017 More Without Saman Bank firmly believes in active management of market risk and with this view in mind, it has devised Less than 3 months to Book value 1 - 3 months 1 - 5 years than 5 specified 1 month 1 year a coherent structure to actively manage such risks. In this structure, the board of directors, Senior Risk years maturity Committee, Resource Allocation Committee (ALCO), Investment Commission, Investment Affairs Division, Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) International Division and Risk Department will play leading roles. The units and departments which are Liabilities tasked with decision-making in the area of risk management are listed below: Due to banks and other credit institutions (2,685,166) (272,390) (1,487,542) (818,988) 0 0 (106,246) Customers' deposits (6,577,292) 0 0 0 0 0 (6,577,292) Shares Customers' deposits 0 0 0 0 0 0 0 Loans received from the National • Senior executive commission at the highest level – for a transaction amount in excess of 50 billion 0 0 0 0 0 0 0 Development Fund rials in a day or 10% of the investee company shares (whichever is lower); Investment depositors' equity (15,884,870) (8,201,897) (1,320,908) (4,691,556) 0 0 (1,670,509) • Investment Commission – for a transaction amount up to the limit of Rls. 50 billion in a day or 10% of (25,147,328) (8,474,287) (2,808,450) (5,510,544) 0 0 (8,354,047) the investee company shares (whichever is lower);
162 Annual Report 163 ) ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Deputy for Investment and Affiliates – for a transaction amount from 3 billion rials up to 30 billion rials 0
• Rial Qatari 200,000
200,000 200,000 200,000
(
in a day and less than 5% of the investee company shares; ( ) ) ) • Investment Affairs Manager – for a transaction amount from 0.2 to 3 billion rials in a day; 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0.12 0.14
Ruble Russian Investment expert – for a transaction amount up to the limit of 200 million 6,697,467.27 • 3,522,810.04 24,723,816.18 34,944,093.49 ( ( 10,220,277.31 34,944,093.49
16,243,547,230
( ) ) ) Foreign currencies 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Won 16.75 18.53
• The International Division and, more professionally, the foreign exchanges office are responsible for 1,841,278,451 1,653,100,047 9,116,395,134
12,469,263,789 55,477,528,187 ( 69,788,070,427 South Korean
7,156,283,993.77 5,503,183,946.77
( ( 2,203,636,773,867 62,631,786,433.23 decision-making on the authorized limits of transactions; 57,884,815,796.68 ) ) ) )
• In certain cases at the weekly commissions held at the International Division, the board chairperson ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2.24 and CEO will participate in decision-making process as deemed proper by the bank’s special and 2.48
4,000 ( 11,865.25 3,951,649
646,317.44 ( ( Omani Rial 3,005,043.09 5,653,833.78 5,090,388.32 1,859,256.32 7,076,996.32 7,739,179.01 10,744,222.1
(
mega policies. ( 294,557,328,725 ) ) ) ) 59-5-3- Methods of measuring the market risk ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
5.62 6.22
1,000.37 ( 71,947,807 15,642,623
The bank trading portfolio is made up of two segments: 3,743,765.10 3,301,475.26 3,591,538.91
24,216,160.06 24,142,410.16 ( ( 27,808,699.34
124,452,866.78 124,817,680.70 ( Chinese Yuan 152,261,566.12 (
739,623,387,274
) )
Shares/stocks ) • ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Foreign exchange open positions 1.73 1.92
• 37,359.46 60,013.10
( 161,073,007 229,596,178 493,858,616
( 260,019,094.77 392,712,103.89 721,231,716.02 480,661,513.52 Indian Rupee 489,652,632.23 882,364,736.12
227,773,020,256 (
In evaluating the market risk of shares, the value at-risk of total shares portfolio with a confidence level of ( ) ) ) 99% will be calculated. ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
3.62 4.00 2615
Pursuant to Basel II requirements and the CBI’s evidence regarding the market risk, the historical simulation 78,719.68
193,373,078 5,165,000.72 1,222,132.07
45,160,338.32 49,518,872.01 ( ( 51,547,471.11 Turkish Lira 100,985,008.44 103,644,940.37
method shall be employed to calculate the necessary capital to cover the risk of shares portfolio. Notably, as ( 475,826,841,144 ( 101,066,343.12
) ) ) ) )
regards the foreign exchange market risk, the forex open position for the total portfolio as well as the degree ) ) ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 of positive/negative open position of each of the currencies and the amount of required capital for the forex 0
0.00 0.00 ( ( 12,748 718.35 12,748 Dollar
( 11,861.02 23,890.67 11,861.02 24,609.02 ( ( ( 344,242,383 (
risk coverage and value-at-risk of foreign currency portfolio, the historical simulation method will also be Australian (
)
used. The open position of a foreign currency will include the absolute value of the following items: ) ) ) ) ) ) ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0.01 A- the rial equivalent of the difference between forex assets and liabilities in any currency entered in the 0.01 ( ( Dollar 2,683.96 63,274.53 2,370,000 58,145.96 60,829.92 ( 60,829.92 Canadian
( ( ( ( on-line accounts of balance sheet; 1,749,225,180 ( ) ) ) ) B- the rial equivalent of the difference between the bank’s and customers’ obligations in any currency ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 entered in the off-line accounts of balance sheet. 0
10.50 11.62
3,321,886
320,591.38 412,512.04 145,966.73 879,024.15 ( ( ( ( 7,361,994.02 1,758,094.30 36,706,609.98 34,948,515.68 Swiss Franc 36,706,609.98 (
Pursuant to the CBI’s directive, the authorized limit of open position for any of the currencies (positive or 1,381,409,979,283 ) negative) is maximum up to 10% of the bank base capital and the authorized limit of open position for all ) ) ) aggregate currencies (positive or negative) is maximum up to 30% of the bank base capital. ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
14.13 15.63
2,728,184 22,987,401 23,992,896 (
191,806,819 ( 6,057,357.40
5,348,228,174 ( 5,371,215,575
120,870,717.05 691,596,248.64
59-5-4- Analyzing the value-at-risk investment in shares and other market-priced 153,649,154.45 Japanese Yen ( 5,217,566,420.55 ( 1,858,601,510,328 ) ) ) ) investments ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0
5.51 Considering the historical simulation method and percentage of possible changes thereupon in the market 6.09
89,013
286,796.25 ( 2,577,821.04 4,504,293.32 1,962,203.50 1,141,872.12 9,349,083.46
46,912,372.42 53,705,665.60 37,266,012.46 70,564,466.43 ( ( ( UAE Dirham value, the level of value-at-risk for investment in shares and other market-priced investments have been 16,717,994.07 87,282,460.50
724,203,118,971 ( ) ) illustrated in the table below: ) ) ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0.11 0.12 0.64
( 138,334 1,492.66 2018 2017 1,663.23
75,268.83 (
113,631.20 927,297.62 608,514.34 280,590.84 UK Pound 723,638.84
( ( 3,808,172.04 ( 1,004,229.68
14,730,457,918 ) ) ) ) Possible change Effect on profit Possible change Effect on profit ) Type of investment in market price 1 and loss2 in market price and loss 0 0 0 0 0 0 0 0 0 0 0 0 0
7.22 7.98
Percentage Rls(m) Percentage Rls(m) Euro 82,580,741 34,503,662
6,704,994.06
95,100,354.68 66,856,567.12 48,892,185.35 20,530,913.71 122,971,635.17 144,670,935.14 433,941,585.08 411,947,233.48 114,124,808.11 ( ( 678,911,408.68 699,442,322.39
949,534,228,174
( (
Investment in quickly marketable shares (-3.3 ,3.6) (1096) (-4.5 , 4.4) (1216) ( ) ) ) ) ) ) ) Investment in units of mutual funds (-1.7 , 1.9) 278 (-1.9 , 2.3) 280 ) ) ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
9.03 9.99 ( 1. Possible change in market price has been calculated for a 10-day period. ( US Dollar 5,946,024.39 5,671,693.74 4,470,887.80 25,559,707.22 22,535,010.47 19,274,017.94 39,360,045.28 22,944,707.92 31,518,439.53 ( ( (
119,543,615.21 ( ( 135,632,221.14 104,113,781.61 1,187,929,985.886 (
( 2. Effect on profit and loss at market price has been calculated for a 10-day period. ( 59-5-5- Analyzing the value-at-risk foreign exchange rate The position of assets and liabilities foreign currency obligations at year-end is shown in this table: Cash in hand Loans granted to and amounts due due amounts and to granted Loans from governmental entities from due amounts and to granted Loans non-governmental entities/persons Due from subsidiaries and affiliates Rial equivalent of open forex position Percentage of open forex position position forex open of Percentage compared to base capital (Percentage) Percentage of open forex position position forex open of Percentage compared to effective base capital (Percentage) Obligations for the amounts received received amounts the for Obligations from the National Development Fund received amounts for Obligations from the Forex Reserve Fund Due from banks and other credit credit other and banks from Due institutions Investment in shares and other other and shares in Investment securities Other accounts recievable Net assets (liabilities) as at March 20, 2017 Due from the government Tangible fixed assets Obligations for LCs opened Intangible assets Obligations for LGs issued Statutory deposit Other assets Total forex assets Due to banks and other credit credit other and banks to Due institutions Cusomers' deposits Dividends payable Debt securities Provision for performance tax Provisions and other liabilities Investment depositors' equity Total forex obligations Net assets (liabilities) as at March 20, 2018
164 Annual Report 165 Considering the historical simulation method and percentage of possible changes thereupon in the foreign 59-5-7- Analyzing the gap between the assets and liabilities sensitive to interest rates exchange rate, the level of value-at-risk for net assets and liabilities in foreign currencies has been illustrated in the table below: 2018
Non-sensitive Less than 3 months to More than 2018 2017 Book value 1 - 3 months 1 - 5 years to interest 1 month 1 year 5 years rate Possible change Effect on profit Possible change Effect on profit Type of currency in market price 1 and loss 2 in market price and loss Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m)
Percentage Rls(m) Percentage Rls(m) Assets
36,749,077 2,701,763 26,522,047 691,861 0 0 6,833,406 Cash in hand US Dollar (-0.03 ,0.49 ) (4,471) (-0.02 , 0.32) (1,335) 1.43% 18.0% 0.0% 3.9% 0.0% 0.0% 0 Euro ( -1.77,2.38 ) 4,296 (-1.86 , 2.27) 3,940 Due from banks and other credit 10,687,731 3,216,057 0 0 0 0 7,471,674 UK Pound (-1.96 , 2.71) 83 (-2.9 , 3.14) (322) institutions 5.42% 18% 0 0 0 0 0
UAE Dirham (-0.07 ,0.48 ) 2,461 (-0.04 , 0.33) 748 Due from the government 0 0 0 0 0 0 0
Japanese Yen (-2.25 , 2.67) 5,602 (-2.89 , 3.39) 709 Loans granted to and amounts due from 0 0 0 0 0 0 0 Swiss Franc (-1.73 , 2.08) 5,256 (-1.92 , 2.08) 435 governmental entities Canadian Dollar (-1.85 ,2.36) (7) (-2.61 , 2.73) (2) Loans granted to and amounts due from 137,836,638 54,227,511 29,987,034 29,023,835 17,821,309 6,776,949 0 non-governmental entities/persons Australian Dollar (-2.31 ,2.6) (1) (-3.05 , 3.1) (1) 15.69% 18.7% 13.2% 15.4% 12.3% 12.3% 0.0% Turkish Lira (-3.88 ,3.19 ) (335) (-3.83 , 2.93) (2,337) Investments in shares and other securities 13,435,948 0 0 0 0 0 13,435,948 Indian Rupee (-1.1 ,1.33 ) 899 (-1.39 , 1.4) 430 Due from subsidiaries and affiliates 2,928,844 0 0 0 0 0 2,928,844 Chinese Yuan (-0.8 ,1.36 ) 3,486 (-1.02 , 0.82) 1 Other accounts receivable 40,359,781 0 0 0 0 0 40,359,781 Omani Rial (-0.24 ,0.54 ) 1,010 (-0.28 , 0.41) 242 Tangible fixed assets 2,972,625 0 0 0 0 0 2,972,625 South Korean Won (-2.05 , 2.24) 10,533 (-2.8 , 2.89) 3,513 Intangible assets 2,216,341 0 0 0 0 0 2,216,341 Statutory deposit 27,478,565 13,283,219 1,850,166 12,019,789 91,534 0 233,858 0.03 0.01 Other assets 35,673,223 0 0 0 0 0 35,673,223
1. Possible change in market price has been calculated for a 10-day period. Total assets 310,338,773 73,428,549 58,359,247 41,735,485 17,912,842 6,776,949 112,125,701
2. Effect on profit and loss at market price has been calculated for a 10-day period. Liabilities and deposits
Due from banks and other credit (9,014,314) (1,002,136) (1,965,959) (126,136) 0 0 (5,920,084) institutions 0.8% 2.7% 2.2% 2.0% 0.0% 0.0% 0 59-5-6- Capital sum required for market risk coverage Customers' deposits (26,399,333) 0 0 0 0 0 (26,399,333)
Dividends payable (51,510) 0 0 0 0 0 (51,510) Shares risk Forex risk Debt securities 0 0 0 0 0 0 0 Total capital Required capital Required capital Measurement method Value-at-risk Value-at-risk reserve for Provision for corporation tax 0 0 0 0 0 0 0 reserve reserve market risk Provisions and other liabilities (9,160,077) 0 0 0 0 0 (9,160,077)
Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) (254,382,253) (122,969,125) (17,127,876) (111,272,948) (847,371) 0 (2,164,935) Investment depositors' equity Historical simulation model 56,104 532,251 23,366 698,310 1,230,561 13.9% 9.2% 19.0% 18.6% 21.3% 0.00% 0
Total liabilities (299,007,488) (123,971,260) (19,093,835) (111,399,083) (847,371) 0 (43,695,939)
Total shareholders' equity (11,331,285) (11,331,285)
Total liabilities and shareholders' equity (310,338,773) (123,971,260) (19,093,835) (111,399,083) (847,371) 0 (55,027,224)
Gap (50,542,711) 39,265,413 (69,663,599) 17,065,472 6,776,949 57,098,476
Accumulated gap (50,542,711) (11,277,299) (80,940,897) (63,875,426) (57,098,476) 0
166 Annual Report 167 2017 59-6- Operational risk Non-sensitive Less than 3 months to More than Book value 1 - 3 months 1 - 5 years to interest 1 month 1 year 5 years 59-6-1- Definition of operational risk rate Operational risk is the risk arising from human error, inefficiency of internal processes, system failure and Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) external events. The operational risk does not include reputation risk and legal risk. Assets
31,494,714 23,849,734 805,050 0 0 0 6,839,931 59-6-2- Executive units of operational risk management Cash in hand 4.57% 5.96% 4% 0 0 0 0% Saman Bank has designed and developed a coherent framework in harmony with other departments/divisions of this bank so as to employ the scope of operational risk management in accordance with the CBI’s Due from banks and other credit 9,676,030 4,202,657 0 0 0 0 5,473,373 regulatory laws and in line with the best prevailing practices in banking industry and accordingly strives to institutions 9.6% 22% 0 0 0 0 0% ensure that operational risks are consistently and comprehensively identified, evaluated, measured and Due from the government 0 0 0 0 0 0 0 controlled. The following departments or divisions are involved in this process: Loans granted to and amounts due from 0 0 0 0 0 0 0 governmental entities • Risk Department: This department acts as an executive unit for operational risk with the aim of identifying the resources exposed to operational risk and implementing the process of operational Loans granted to and amounts due from 127,750,201 58,898,247 19,898,136 25,757,207 19,173,105 4,023,506 0 risk management at the level of organizational process. More importantly, the process of operational non-governmental entities/persons 19% 21.4% 19.3% 19.1% 15.4% 12% risk management is practiced in a unified approach which includes risk identification, risk Investments in shares and other securities 2,777,794 0 0 0 0 0 2,777,794 assessment, risk indicators monitoring and further through risk mitigation plans in line with the risk
Due from subsidiaries and affiliates 2,802,935 0 0 0 0 0 2,802,935 appetite. As it stands, by receiving the periodic and updated reports from other executive departments which are acting in this connection, the operational risk in the bank’s key processes is monitored, Other accounts receivable 23,863,436 0 0 0 0 0 23,863,436 measured and evaluated. Tangible fixed assets 3,613,037 0 0 0 0 0 3,613,037 • Quality Improvement Department: This department’s main functions are to design and document the Intangible assets 4,301,189 0 0 0 0 0 4,301,189 operational procedures, define and develop the kind of relationship with other organizational divisions Statutory deposit 23,035,684 13,606,089 1,249,677 7,113,703 1,066,215 0 0 with respect to the operational processes, determine the monitoring indicators for evaluation and Other assets 28,719,884 0 0 0 0 0 28,719,884 control as well as establishing an effective link between regulations and directives with the existing processes. This structure has been devised and developed for standardization of processes and Total assets 258,034,904 100,556,727 21,952,863 32,870,909 20,239,320 4,023,506 78,391,578 minimization of operational events or occurrences. Liabilities and deposits Inspection Department: This department will perform periodic inspections of operational processes (9,757,594) (272,390) (1,487,542) (818,988) 0 0 (7,178,674) • Due from banks and other credit at branch levels in accordance with the prevailing directives, procedures and by-laws and then will institutions 1.2% 1.74% 2.47% 2.9% 0 0 0.0% file reports on the findings of such inspections. The contents of these reports will be used as the base Customers' deposits (17,062,512) 0 0 0 0 0 (17,062,512) data for analyzing the operational events at branch levels. As such, the operational risk of branches Dividends payable (52,483) 0 0 0 0 0 (52,483) will be assessed by the type of events documented by the Basel Committee with respect to the number (frequency) of events and the severity of possible losses as reported by the Risk Department. Debt securities 0 0 0 0 0 0 0 Provision for corporation tax 0 0 0 0 0 0 0 59-6-3- Preventive measures from occurrence of intentional and unintentional human errors Provisions and other liabilities (5,104,169) 0 0 0 0 0 (5,104,169) In view of the fact that one of the effective factors which may result in operating losses is typically shaped (214,853,050) (125,765,862) (11,551,203) (65,754,452) (9,855,400) 0 (1,926,132) Investment depositors' equity up by individuals in an organization, Saman Bank has taken a series of actions as listed below to prevent the 15.13% 12.64% 17.48% 18.37% 22.57% occurrence of human intentional and unintentional events by its personnel: Total liabilities (246,829,808) (126,038,252) (13,038,745) (66,573,440) (9,855,400) 0 (31,323,970) • attempt to create culture and a transparent environment in which all employees, divisions and Total shareholders' equity (11,205,096) (11,205,096) departments will be aware of performing their duties and responsibilities thoroughly with regard to Total liabilities and shareholders' equity (258,034,904) (126,038,252) (13,038,745) (66,573,440) (9,855,400) 0 (42,529,066) the adverse events of operational risk; Gap (25,481,526) 8,914,118 (33,702,531) 10,383,920 4,023,506 35,862,513 • dissemination of a proper culture with regard to operational risk so as to institutionalize the Accumulated gap (25,481,526) (16,567,408) (50,269,939) (39,886,018) (35,862,513) 0 enforcement of decent ethical standards; • planning to organize training courses to ensure that the staff members have sufficient knowledge and expertise in their career path.
59-6-4- Actions to confront a crisis To obtain assurance for maintaining the situation in times of crisis and/or returning to normal situation under a well-defined plan in the shortest possible time aimed at minimizing the implications of crisis occurrence, Saman Bank has designed a non-operating defense by-law.
59-6-5- Method of assessing operational risk Saman Bank employs the base index approach for inclusion of operational risk in its calculations related to capital adequacy ratio as required by the Basel II guidelines. Additionally, Saman Bank is currently striving to create and develop the structures required for assessing the operational risk by using an advanced calculation method. To this end, the bank needs to identify and assess the operational risk in all working processes. The identification and assessment tools are listed below:
168 Annual Report 169 • Using the risk self-assessment method qualitatively through interaction with directors and 59-7- Capital management operational divisions of the bank; • Using the findings and collected data in connection with adverse operational risk events in the bank’s 59-7-1- Base capital daily operations resulting from regular inspection and auditing; The bank base capital for the fiscal year ended March 20, 2018 was the amount of Rls. 13,152,539/ million. • Using the risk key indicators in the important processes so as to conduct a survey of the operational risk trends. 2018 2017 Rls(m) Rls(m) 59-6-6- Mechanisms for controlling and monitoring operational risk A) Tier 1 (core) capital Mechanism for controlling operational risk Capital less funds raised out of assets revaluation reserve 5,575,004 5,575,004 Legal reserve 1,689,324 1,536,569 Upon assessment of operational risk, the bank will determine which categories of risks it may accept or Other reserves 0 0 control. The control of operational risk shall take place through full cooperation with respective executive departments. The key measures taken in this area include identification of the processes bottleneck which Shares premium 0 0 is deemed to be a factor for creating operational risk (individuals, systems, processes and external events) Retained profit (loss) 1,026,990 161,379 and development, review of amended and preventive by-laws related to the occurrence of operational Treasury shares 0 0 adverse incidents. 8,291,318 7,272,952 Mechanism for monitoring operational risk B) Tier 2 capital General provision for doubtful debts 1,794,479 1,794,479 The bank’s operational risk position will be monitored so as to review the efficiency and effectiveness of controls as well as the effect of any new incident on the organization profile during the course of specified Fixed assets revaluation reserve 3,365,975 3,932,144 periods. During each period, the amount of resources exposed to operational risk, frequency and severity Reserve from shares revaluation 0 0 of the effect of risk factors, key risk indicators and further the degree of efficiency and effectiveness of 5,160,454 5,726,623 current controls will be reviewed and monitored. Less addition of tier 2 capital to tier 1 capital 0 0 59-6-7- The capital sum required for operational risk coverage Tier 2 capital 5,160,454 5,726,623 Base capital prior to deductions 13,451,772 12,999,575 The capital sum required for operational risk coverage at Saman Bank will be measured and gauged by using the base index method. The amount of capital exposed to operational risk is listed below: C) Deductions from base capital Investment in banks and secondary credit institutions - unconsolidated 0 0 Measurement method amount of capital exposed to operational risk Investment in other banks and credit institutions (299,233) (266,854) 2018 2017 (299,233) (266,854) Rls(m) Rls(m) Base (regulatory) capital 13,152,539 12,732,721 Base index 856,380 683,148 Effective base capital 11,892,888 11,892,888
The effective base capital amounting to Rls. 11, 892, 888 million is used to calculate the contingency ratios until the approval date of financial statements (base capital for the year 2015-2016). The bank’s new base capital shall also be fixed on the basis of approved financial statements and endorsed by the Central Bank after any possible changes, modifications or deductions such as distribution of dividends among shareholders have been made in the financial statements by the general meeting.
170 Annual Report 171 59-7-3- Capital adequacy ratio (CAR) The bank capital adequacy for the fiscal year ended March 20, 2018 is six (6%) percent. 0 0 0 0 0 0 0
Rls(m) 768,133 376,872 644,251 100,728
liabilities 5,771,488 2,404,231 7,914,227 1,287,595 1,338,912 assets and
23,863,436 14,396,751 28,719,884
100,736,461 188,322,968
Risk adjusted 2018 2017 Rls(m) Rls(m) Effective base capital 11,892,888 11,892,888 Total risk weighted assets and liabilities 231,519,028 188,322,968 0 0 0 0 0 20 50 100 100 100 100 100 100 100 100 100 100 100 2017 Capital adequacy ratio (Percentage) 5 6 Risk factor Percentage
59-7-4- Final capital adequacy ratio after the bank’s general meeting 0 0 0 0
Rls(m) 2018 2017 768,133 376,872 644,251 100,728
liabilities 9,645,020 2,404,231 7,914,227 1,287,595 1,338,912 assets and
31,494,714 23,035,684 28,857,440
23,863,436 28,793,501 28,719,884
100,736,461 Rls(m) Rls(m) Effective base capital 13,152,539 12,732,721 Total risk weighted assets and liabilities 231,519,028 188,322,968 0 0 0 0 0 0 0 Capital adequacy ratio (Percentage) 6 7
Rls(m) 30,788 15,181
liabilities 6,626,345 9,625,750 5,188,966 1,753,007 1,254,165 9,059,700 assets and
40,359,781 29,172,809 82,031,229 35,673,223 10,728,084
231,519,028 Risk adjusted
59-7-4-1- The capital adequacy ratio will be raised to 7.41 when the bank’s capital increase to Rls. 12,000/ billion is materialized with the Central Bank’s approval. 0 0 0 0 20 50 100 100 100 100 100 100 100 100 100 100 100 100 100
2018 59-7-5- Leverage ratio Risk factor Percentage The leverage is the total shareholders’ equity to bank’s assets. The bank’s leverage ratio for the fiscal year ended March 20, 2018 is four (4%) percent.
2018 2017 0 0 0 Rls(m) Rls(m) Rls(m) 30,788 15,181 liabilities 3,371,143 9,625,750 5,188,966 1,753,007 1,254,165 9,059,700 assets and 36,749,077 27,478,565 11,358,667 33,131,727 40,359,781 58,345,618 82,031,229 35,673,223 10,728,084 Total shareholders’ equity 11,331,285 11,205,096 Total assets 310,338,772 258,034,903 Leverage ratio (Percentage) 4 4
60- Operating sectors 60-1- The basis for division of sectors The business sectors in Saman Bank include collaborative banking (by proxy), Gharzolhasaneh (interest-free) banking, international banking and electronic banking. 59-7-2- Capital allocation The total bank’s risk weighted assets for the fiscal year ended March 20, 2018 add up to Rls. 231, 519, 028 million. Cash in hand Statutory deposit Due from CBI Due from banks and other credit institutions Due from the government Government participation bonds Non-government participation bonds Investment in shares Accounts receivable Hire purchase and housing loans Other loans paid and amounts due Net fixed assets and goodwill Other assets Guarantee for participation bonds of non-governmental sector (Conversion factor 50%) Obligations for LGs issued (conversion factor 20%) Obligations for LGs issued (conversion factor 50%) Obligations for LCs issued (conversion factor 20%) Obligations for LCs issued (conversion factor 50%) Obligations for transactional contracts (conversion factor 50%) Other liabilities Total risk weighted assets and liabilities
172 Annual Report 173 60-2- Information on reportable operating sectors 60-3- Geographical concentration of major items of assets, liabilities and incomes The information related to each of the reportable sectors has been provided in the following table. The profit In providing the geographical information, the major items of assets are reported on the basis of their location before tax for each sector is used to assess the performance of that sector. and the major items of liabilities and incomes on the basis of the bank counterparty’s domicile/residence in various geographical regions.
Collaborative Interest free International Other banking E-banking Total 2018 banking banking activities (by proxy) Type of Currency Iran Iraq UAE Other Total Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Incomes earned from outside the bank Assets Income from loans granted and Cash in hand 36,749,077 0 0 0 36,749,077 18,975,702 0 604,177 0 0 19,579,880 placements in other banks Due from banks and other credit institutions 10,687,731 0 0 0 10,687,731 Interest expenses on deposits (33,379,523) 0 (442,953) 0 0 (33,822,475) Due from government 0 0 0 0 0 Net income from loan interest and Loans granted to and amounts due from (14,403,820) 0 161,225 0 0 (14,242,595) 0 0 0 0 0 placements in other banks governmental entities Loans granted to and amounts due from Fee and commission incomes 587,627 59,887 65,496 927,623 0 1,640,633 137,836,638 0 0 0 137,836,638 non-governmental entities/persons Fee and commission expenses (47,359) 0 (6,080) (1,898,429) 0 (1,951,867) Investments in shares and other securities 13,435,948 0 0 0 13,435,948 Net income from fees and commissions 540,268 59,887 59,416 (970,806) 0 (311,235) Due from subsidiaries and affiliates 2,837,893 0 0 0 2,837,893 Net profit (loss) from investments 0 0 0 0 7,838,581 7,838,581 Statutory deposit 27,478,565 0 0 0 27,478,565 Net profit (loss) from forex 0 0 0 3,949,737 0 3,949,737 Tangible fixed assets 2,972,625 0 0 0 2,972,625 exchanges/transactions Intangible assets 2,216,341 0 0 0 2,216,341 Other operating incomes 0 0 0 0 9,955,090 9,955,090 Total assets 234,214,819 0 0 0 234,214,819 0 0 0 3,949,737 17,793,672 21,743,409 Liabilities Net incomes earned from outside Due to banks and other credit istitutions (9,014,314) 0 0 0 (9,014,314) (13,863,552) 59,887 220,640 2,978,931 17,793,672 7,189,578 the bank Customers' deposits (26,399,333) 0 0 0 (26,399,333) Net incomes from interbank sectors 0 0 0 0 0 0 Debt securities 0 0 0 0 0 Total incomes from bank's operating Investment depositors' equity (254,382,253) 0 0 0 (254,382,253) (13,863,552) 59887 220640 2978931 17793672 7189578 sectors Total liabilities (289,795,901) 0 0 0 (289,795,901) Expenses for doubtful debts of Incomes 42,963,921 0 0 0 42,963,921 (500,000) 0 0 0 0 (500,000) operating sector
Other direct expenses attributable to 0 0 0 0 0 0 operating sector 2017 Profit (loss) of each sector before Type of Currency Iran Iraq UAE Other Total (14,363,552) 59,887 220,640 2,978,931 17,793,672 6,689,578 non-attributable general expenses Rls(m) Rls(m) Rls(m) Rls(m) Rls(m) Assets General expenses non-attributable Cash in hand 31,494,714 0 0 0 31,494,714 (5,671,212) to sectors Due from banks and other credit institutions 9,676,030 0 0 0 9,676,030 Profit before tax 1,018,367 Due from government 0 0 0 0 0 Loans granted to and amounts due from 0 0 0 0 0 The non-rial transactions of collaborative banking (by proxy) and Gharzolhasaneh (interest-free) banking sectors are disclosed in the international governmental entities banking sector. Loans granted to and amounts due from 127,750,201 0 0 0 127,750,201 All non-rial transactions are disclosed in the international banking sector. non-governmental entities/persons Investments in shares and other securities 2,777,794 0 0 0 2,777,794 Due from subsidiaries and affiliates 2,802,935 0 0 0 2,802,935 Statutory deposit 23,035,684 0 0 0 23,035,684 Tangible fixed assets 3,613,037 0 0 0 3,613,037 Intangible assets 4,301,189 0 0 0 4,301,189 Total assets 205,451,584 0 0 0 205,451,584 Liabilities Due to banks and other credit istitutions (9,757,594) 0 0 0 (9,757,594) Customers' deposits (17,062,512) 0 0 0 (17,062,512) Debt securities 0 0 0 0 0 Investment depositors' equity (214,853,049) 0 0 0 (214,853,049) Total liabilities (241,673,155) 0 0 0 (241,673,155) Incomes 38,208,763 0 0 0 38,208,763
174 Annual Report 175 Is it liable to Balance Balance 61- Disclosure about related parties transactions Type of article 129 of Total Gross profit Name of related party Type of deal Pricing method (due) (due) Relationship Commercial amount (loss) March 20, March 20, 61-1- Changes in major shareholders (over one percent) Code? 2018 2017 Rls(m) Rls(m) Rls(m) Rls(m)
During the fiscal year ended March 20, 2018, no real or legal person entered the category of shareholders over Contracts - 4 items 22,209 0 2,800 0 one percent by purchasing shares. Further, no natural or legal person exited from the category of shareholders JBM Saman (Joint Board Civil partnership - 1 item Bank's by-laws and 0 0 0 0 over one percent by selling shares. Processing Member) Yes internal transactions (Pardazeshgaran) and commission LGs issued – 4 items 0 0 111 0 Co-Group 61-2- Transactions with directors LGs issued – 1 item 0 0 0 11,594 LGs issued – 14 items 0 - 24,136 This bank has no record of transactions with its directors (the directors here include the managing LGs issued – 17 items 0 43,342 0 director/CEO, members of board of directors and members of the executive board.) Saman Satelite Civil partnership - 5 item Bank's by-laws and 173,333 77,215 0 Tele- Co-Group No internal transactions 11,229 61-3- Transactions with related parties during the year are as follows communication commission Contracts - 2 items 0 0
Civil partnership - 1 item 0 0 43,077
Civil partnership - 7 item 0 0 0 0
Bank's by-laws and Atieh Andishan LC - 1 item 0 0 0 0 Co-Group No internal transactions Sepehr Mehr LGs issued – 5 items commission 0 0 0 0 Loans - 6 items 0 0 0 67,004 Subsidiaries LGs issued – 2 items 0 0 0 JBM Contract - Credit 0 0 0 Hafez Saman (Joint Board reporting software Bank's by-laws and Iranian Credit Member) Yes internal transactions Contract - debt Scoring and commission 0 0 0 (3,312) Co-Group collection loans - 310 items 0 0 111,153 LGs issued – 2 items 0 0 9,078 LGs issued – 2 items 0 3,710 0 Bank's by-laws and Saman Civil partnership Co-Group No internal transactions 7,312,971 32,424 100,266 0 Brokerage - 201 items commission Muzarebeh loans 1,541,800 213,189 0 - 10 items
Lease contracts - 3 items 0 0 344
Bank's by-laws and Atieh Andishan Co-Group Sale of shares No internal transactions 0 0 1,970,676 1,970,676 Sepehr Shargh commission
Bank's by-laws and Saman Exchange Co-Group Lease contracts Yes internal transactions 14,667 0 9,017 0 commission
Bank's by-laws and Tondar Nour Co-Group LGs issued – 1 item Yes internal transactions 0 0 875 0 commission
Contracts - 3 items 135,575 2,330 (13,196)
Lease contract - 0 0 0 Pasdaran - Shiraz Bank's by-laws and Adonis Co-Group No internal transactions 7,514 Civil partnership - 4 item commission 109,687 49,141 0
Civil partnership - 3 item 0 0 57,972
Affiliates Civil partnership - 6 item 0 0 83,703
JBM Civil partnership - 5 item 316,667 136,021 0 Saman Kish (Joint Board Bank's by-laws and Electronic Member) LGs issued - 19 items Yes internal transactions 0 8,244 0 177,729 Payment and commission LGs issued - 10 items 0 115,563 0 Co-Group Lease contract 0
Leans and Services 0 0 255 Contracts - 6 items
Bank's by-laws and Copper Pension Board Loan - 1 item internal transactions 250,000 0 261,617 0 Fund member commission Board members Bank's by-laws and Board Ahmad Mojtahed LGs issued – 1 item internal transactions 0 0 0 0 member commission
176 Annual Report 177 Is it liable to Balance Balance Type of article 129 of Total Gross profit Name of related party Type of deal Pricing method (due) (due) 63- Performance of Gharzolhasaneh (interest-free) savings deposits Relationship Commercial amount (loss) March 20, March 20, Code? 2018 2017 in rial Gharzolhasaneh (interest-free) LGs issued – 3 items 0 0 95
LGs issued – 1 item 0 400 63-1- Status of balance of (interest-free) Gharzolhasaneh sources and Cleaning Services Bank's by-laws and 1 0 0 0 applications Aftab Tejarat Other Contract No internal transactions commission Cleaning Services 0 0 0 (7,793) Note 2018 2017 Contract Contracts - 5 items 0 0 (1,031) Rls(m) Rls(m) Insurance policies 0 0 0 (7,821) Interest-free deposits in rial Sale of shares Bank's by-laws and 0 0 0 1,141,000 Total interest-free sources 20-2 6,399,213 539,462 Saman Insurance Shareholder Sale of Yes internal transactions Uses of interest-free savings 539,462 0 0 0 0 6,399,213 commission shares - 2017-2018 Loans granted in rial and amounts duefrom governmental entities (before provision) LGs issued – 23 items 0 0 13,616 0 Ordinary loans 0 0 Contracts - 8 items 0 0 0 105,366 Bank's by-laws and Loans under note --- to the budget 0 0 Sales contracts - real Behnad Bana Other No internal transactions 5,059,239 0 5,005,875 0 Loans under note --- to the budget 0 0 states - 43 items commission Total loans granted and amounts due from governmental entities 0 0 Other LGs issued – 1 item 0 0 19,200 0 related Loans granted and amounts due from non-governmental entities (before provision) Lease contract Bank's by-laws and 40,514 21,542 0 parties Personnel Ordinary loans (1,395,628) (764,155) Other No internal transactions Savings Fund Sales commission 13,460,000 13,260,000 Staff loans (13) (131) contracts - real state Loans under note --- to the budget 0 0 Bank's by-laws and Loans under note --- to the budget 0 0 Kish Cell Pars Other No internal transactions 276,151 36,171 commission Total loans granted to and amounts due from non-governmental entities 11 (1,395,641) (764,286) Total uses of interest-free sources (1,395,641) (764,286) Civil partnership - 12 item 1,979,070 1,400,495 0 Statutory deposit on sources of interest-free deposits (624,650) (67,057) Jealeh Liquidity reserve on interst-free deposits (5%) (319,961) (26,973) 19 0 0 contract - 1 item Surplus (shortage) of sources to uses of interest-free deposits 4,058,961 (318,855) Bank's by-laws and Kala Tejarat Retail loans - 3 items 1,560,250 522,946 0 Other No internal transactions 175,252 Khalij Fars Jeale contract - Swiss commission 0 0 0 63-2- Net fees on Gharzolhasaneh (interest- free) transactions Franc 5 items Civil Partnership - 0 0 1,771,630 Swiss Franc 32 items Note 2018 2017 LGs issued – 1 item 0 0 2,790 Rls(m) Rls(m) Fees received from interest-free loans 60,703 23,945 Prizes on interest-free deposits (816) (816) 61-4- Balances of accounts (receivables) of related parties with whom no transactions have been conducted Net fees on interest-free transactions 36-1 59,887 23,129 during the year are as follows: 63-3- Classification of Gharzolhasaneh (interest- free) loans by a breakdown of Adjustments Type of Received (expenses Balance (due) at Balance (due) at Name of related party the purpose relationship (Paid) of doubtful March 20, 2018 March 20, 2017 debts and …) Rls(m) Rls(m) Rls(m) Rls(m) 2018 2017 Atieh Andishan Sepehr Mehr Service Development Co. Subsidiary (9,304) 0 9,304 0 Rls(m) Rls(m) Atieh Andishan Sepehr Shargh Service Development Co. Subsidiary (10,098) 0 210,098 200,000 Marriage 1,221,156 666,860 Saman Financial & Electronic Development Group Subsidiary 0 0 2,003,586 2,003,586 Relief (Emdad) Committee pensioners 130,846 79,418 Kardan Investment Bank Affiliate 221,955 0 42,645 264,600 Ordinary people 43,626 17,878 Staff members 13 131 1,395,641 764,286 62- Accumulated earnings at year-end 63-4- Classification of Gharzolhasaneh (interest- free) loans by a breakdown of Allocation of the year-end accumulated earnings are subject to the approval of the shareholders’ ordinary general meeting in the following circumstances: the type of customer
Amount 2018 2017 Rls(m) Rls(m) Legal duties Rls(m) Real persons 1,395,641 764,286 Distribution of at least 10 percent of net profit earned in 2017-2018 under the provision of article 90 of the Commercial Code Amendment 101,837 Legal persons - Cooperative society 0 0 Legal persons - Other 0 0 Proposal by the board of directors 1,395,641 764,286 The amount of dividend proposed by the board of directors 0
178 Annual Report 179 19 / 2018 Annual Report
Annual Report 2018/19